TERMS OF AGREEMENT
Contracts should be drafted to ensure that specific topics are addressed. A construction contract should identify the contractor, the owner, and the designer. The scope of work for which the contract is being drawn should also be defined. The project may be defined in a descriptive fashion, along with specific reference to documents such as the construction drawings and specifications.
The contract may stipulate that the construction project must be completed by a given date or within a given number of days of the notice to proceed. Failure to complete the project with stipulated time may result in liquidated damages charged against the contractor.
The contract will state how payments are to be made to the contractor. General, payments are made on a monthly basis. However, on small projects the payment for the entire project may occur after the project is completed. On other projects the contractor may be given an agreed sum before construction begins, with the understanding that the final payment will be made after project completion.
There are three types of construction contracts are the unit price contract, the cost plus contract, and the lump sum contract. There is no best form of contract. The nature of the project and the specific needs of the owner will determine the form that is most suited for the project.
Finally, the contract must contain the signatures of the contracting parties.
UNITS PRICE CONTRACT
A contract in which payment is based on a contractor's quoted price per unit of work performed and the owner's measurement of the total number of such units installed. By using this method the owner is not certain of the actual cost of the project until the project is completed. ...