Terms and Conditions

        Understanding Construction Contracts


     • Governing Law & Jurisdiction – Look at the governing law provision to make
     sure that you are comfortable with the implications of the state law chosen by the
     drafter. This can impact the interpretation of the contract from warranties to

     Additionally, when specific statutes or regulations are referenced in the body of a
     contract, it is as though that statute or regulation is wholly contained within the
     contract itself. It is vital to read and understand that language prior to giving your
     consent. This happens regularly in government contracting situations.

     • Dispute Resolution – This is another clause with which you must be comfortable
     with the laws of the state or forum chosen by the drafter. The rules chosen to
     govern dispute resolution can impact the outcome. Additionally, you should
     consider whether dispute resolution is right for your situation.

     • Intellectual Property – When you are disclosing and/or licensing your company’s
     intellectual property, be it trademarks, copyrights or patents, it is important to
     include a clause that recognizes the owner of such intellectual property and
     affirmatively states that the agreement does not transfer any rights.

     • Standard of Care – A standard of care clause may appear in certain types of
     contracts. The standard of care that is provided by the law should provide the
     minimum standard of care for the provision of services under the contract.

     • Term/Termination – The contract should provide both parties with the right to
     terminate the contract. The situations in which termination is allowed will vary from
     contract to contract. Some contracts will allow the right to terminate in cases of
     dissatisfaction; others will allow it with a specific notice, for no cause. It is
     important that you contemplate in what cases you would want the right to
     terminate the contract. There should also be language defining the term of the
     contract. Does it have a finite term? Does it automatically renew each period?

     • Right to Cure – Related to termination, some contracts will contain a right to cure
     clause. This would give the defaulting party notice of a breach and a finite period of
     time in which to remedy such breach.

Construction contracts can contain terms that impact your company’s bottom line. Reviewing them carefully prior to signing is indispensable, and can save your company time and money. This contract review guide is meant to be a starting point for reviewing contracts in general. It highlights some common contract terms and their potential impact. You can begin to understand which terms are most often negotiated in contracts generally. Then, with the help of licensed inside or outside counsel, analyze the commercial risks associated with construction contracts in depth and understand terms and conditions to protect your company’s assets.