Episode 149:

One size doesn’t fit all when it comes to construction contracts. Can you guarantee that your business is protected from all angles?

In this episode of “The Building Code,” Zach and Charley discuss the importance of construction law and safeguarding contracts with Scott Green, the managing partner at The Green Law Group. Scott shares his top three ways to be the best contractor from a legal perspective.

Listen to the full episode to hear more about creating construction contracts and how to legally protect your business from unforeseen challenges.

HOW HAVE CONSTRUCTION CONTRACTS CHANGED WITH THE LACK OF SUPPLY AND INCREASED DEMAND OVER THE PAST COUPLE OF YEARS?

“If we're drafting a contract today, we're putting in an escalation clause that essentially says, ‘Look, I've included X amount for, let's say, electrical fixtures. But if that number goes up by 10%, I'm going to provide an affidavit showing my clause, and then we're going to submit a change order, so we get some more money.’ But just a few years ago, nobody was thinking about that. So, we're getting calls from property owners and from contractors on the property owner side. It's, ‘Hey, my contractor wants another 10 grand, and we had a fixed price contract. What's up with that?’ And from the contractor's point of view, it's, ‘Well, we had a pandemic. And that's disrupted everything, and my costs are going through the roof.’ So, there's a lot of brewing disputes on that particular issue.”

WHAT IS YOUR FIRST PIECE OF ADVICE FOR CONTRACTORS LOOKING TO LEGALLY PROTECT THEIR BUSINESS?

“I start with contracts. Contractors get into the business typically because they're mechanics, they want to build things. They don't like paperwork. The unfortunate, sad truth is the paper side of the business is at least as important as your ability to build things. You can't ignore the paper side and that generally starts with the bidding process and then the contract. And then you're going to draft a contract, or you're going to get a contract. You’ve got to read the darn thing. And it might be a small telephone book, but what contracts are about is they’re about shifting risks between the contracting parties.

So, if you get a contract, when you're reading it, every provision you should look at it and think, ‘Okay, what just got pushed over to my plate? What am I responsible for? What's it going to cost me? Did I include that in my bid or not?’ And if you read a provision, you don't understand it, circle it, send it back to the party that sent it to you, and say, ‘Hey, you know what? I'm reading this thing and I can't make heads or tails out of it. What did you have in mind?’ Start a conversation. Don't be afraid to negotiate.”

LINKS AND MORE

For legal resources and to learn more about The Green Law Group, check out their website.

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