Agreement Between Developer and Contractor: Important Details to Keep in Mind
In the world of construction, a developer and contractor often work together to bring a project to fruition. Whether the project is a new construction or a renovation, the agreement between these two parties is crucial to the success of the project. As a professional, I’ve seen many different types of agreements between developers and contractors. Here are some important details you should keep in mind when creating your own agreement.
The Scope of the Project
The scope of the project is one of the most important details of the agreement. The developer and contractor should be clear on what the project entails, including the specific work to be done and the timeframe for completion. The agreement should also include any special requirements or conditions of the project.
Payment Terms and Schedule
The payment terms and schedule is another important aspect of the agreement. Developers and contractors should agree on the total amount to be paid, the payment schedule, and the method of payment. It’s important for both parties to be clear on this aspect to avoid any misunderstandings or disputes down the line.
Warranties and Guarantees
A warranty or guarantee is a promise made by the contractor to the developer that the work will be done in accordance with specific standards or requirements. The agreement should clearly define any warranties or guarantees that the contractor will provide, including the duration of the warranty.
Contractors and developers should agree on the allocation of risks for the project. This includes identifying any potential risks that may arise during the project, as well as outlining who will be responsible if a risk materializes. The agreement should also include any indemnification provisions.
The agreement should include a termination clause that outlines the circumstances under which the agreement can be terminated. This may include failure to meet deadlines, non-performance, or material breach of the agreement. This clause should also outline the process for termination and any penalties for early termination.
Change Order Process
The change order process is important to clarify in the agreement. This outlines the process for any changes to the scope of work or any other aspects of the project. The agreement should include the process for submitting change orders, how changes will be evaluated, and how they will impact the project timeline and budget.
Creating an agreement between a developer and a contractor takes time and careful consideration. The agreement should clearly define the scope of the project, payment terms, warranties, risk allocation, termination clauses, and change order processes. It’s important for both parties to review and understand the agreement before signing to ensure a successful partnership.