Importance of agreement with contractor

Importance of agreement with the contractor


In a previous article, we have discussed with you the different kinds of contracts in construction and their importance.

It is generally advisable to contract out your work instead of taking on the headache on yourself.

When you give out the construction contract, it becomes important to be clear about the terms and conditions of the agreement.

Having a legal, binding written agreement makes the goals clear and discourages any disputes that might occur due to a lack of understanding of the job and would also help in resolving any dispute that does arise.

Therefore, an agreement becomes important.

 An agreement with the contractor would clearly define the scope of the work and the responsibility of the contractor.

It should have a clear and definite date of the beginning of the project and a set deadline, by which the project should be completed, which is agreed upon by both the client or owner and the contractor.

The agreement would have guidelines about what would be done in a situation when the agreement is mulled or violated by any of the parties.

This would ensure that no exploitation or losses are occurring on either of the parties involved.

 The agreement has clear terms and conditions of the work, detailing the procedure that would be involved, the techniques and technologies which will be employed, the quality that should be maintained, and what would happen if the codes are not adhered.

It has defined penalties for quality control purposes, which might be imposed if the work is found to be unsatisfactory and not found as per the agreed-upon standards.

 It protects the client in terms of ensuring the work quality is maintained and the work is completed on time.

There are provisions included for change management.

For larger projects often additional time is needed and sometimes there are new requests that fall outside of the original scope of work, therefore it becomes important to ensure that additional time is allotted to this.

It is also important to discuss and include payment terms which should be very clear.

 The agreement protects the contractor in terms of ensuring that they get paid for the work they have done, for the services they have provided, the length of review time for each deliverable, and the acceptable number of rounds of requested changes.

Thus, in the case of any dispute would be easier to go back to see what was agreed upon and resolve the situation accordingly.

If the parties are not able to resolve the dispute on their own, they might proceed with arbitration or court case.

 In the absence of any agreement, it would be impossible to ascertain what the agreed-upon conditions of work were and this would result in many disagreements and disputes during and after work.

Thus, the agreement is a tool that is used to safeguard the interests of both parties involved in the construction.

Agreements become even more important for a sector like construction which is largely unorganized.

They help in dealing with man and machinery by stating clear terms.

It provides security and peace of mind to all involved.

It helps deter conflict which might be costly and time-consuming.


The agreement has provisions for the legal protection of the organization and the independent contractor.

The financial burden of a lawsuit isn’t desirable to either party.

Thus any insurance requirements are put in writing and ensure that the contractor is clear on what they need to provide and who must be listed as an additional insured.

You must review and include intellectual property rules and how you want the contractor to handle confidential information.

When you giving out the contract for construction, it becomes important to be clear about the terms and conditions of the agreement.

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