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How to draw up a simple contract between a company and general contractor for building construction

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percentage to pay to a purveyor of new equipment who is to receive 5% mark up

Attorney Answers 5

Posted

I am really not sure if there is a question here that can be answered.

If you do not understand how to properly draft a legal agreement, and unless you have a lot of experience in this there is no reason why you should, you should hire a local professional to handle that for you, or take the contract someone else prepared to a lawyer so it can be reviewed.

Most of us here, including myself, offer a free phone consult.

Best regards,
Frank
Natoli-Lapin, LLC
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Posted

Contracts between a company and general contractor are never simple, unfortunately. They may seem so, but in reality there are hundreds of potential pitfalls and traps that have gotten companies and general contractors into massive legal battles, and even battles with the client over poor wording.

You should really sit down with both an attorney and negotiate a contract that has all the wording and formalities necessary in this type of deal. It may seem expensive, but any experienced and successful contractor will tell you otherwise.

Matthew Johnson phone# 206.747.0313 is licensed in the State of Washington and performs bankruptcy, short sale negotiations, and estate planning in Whatcom, Skagit, Snohomish, King and Pierce counties. The response does not constitute specific legal advice, which would require a full inquiry by the attorney into the complete background of the facts and circumstances surrounding this matter; rather, it is intended to be general legal information based on the limited information provided by the inquirer; it This response also does not constitute the establishment of an attorney-client relationship, which can only be established after a conflict of interest evaluation is completed, your case is accepted, and a fee agreement is signed. Johnson Legal Group, PLLC

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Posted

A lawyer who helps you with this project may also give you a tool you can use for other situations, if you regularly are involved in them. The advice you can get may be worth as much or more as the contract that can be developed. I agree there is usually no perfect contract, but perhaps your lawyer can get you a standard form that covers a lot of the concerns you might otherwise have. Good luck.

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1 comment

Thomas Richelo

Thomas Richelo

Posted

You may also benefit from checking out my legal guide on this site, :"Terms and Conditions You Need." It is focused on the most basic items a contractor should have in the simplest forms, whether they are purchase orders or just terms you try to put on the back of an statement or invoice. Recognize it's designed for Georgia but is still a guide to some basic considerations. Good luck.

Posted

I heartily agree with the other two responses. I find construction contracts between owner and contractor to be some of the most complex and demanding contracts that I prepare or review. And that is true even when an architect is involved and uses AIA forms. Since at least 1989 I have made extensive revisions to many AIA contracts and versions of the General Conditions. Sometimes most of my proposed changes are accepted and occasionally not and sometimes we have significant negotiation to agree upon specific language. For me that is a time and labor intensive process. Once when a client needed a quicker turnaround than I could do and still perform what I considered proper work on a large dollar project, the client engaged a lawyer who could respond much quicker; the project wound up in litigation, and I still do much of the legal work for that client. If the building is more than a simple, small concrete block box on flat land or if you stand to lose substantially [you define that] if the project tanks, then for sure you should have an architect and lawyer involved. On the other hand, if you would confidently perform surgical removal of a probably benign tumor on yourself, then maybe you can do without the professional help and save the fees. Good luck.

These comments do not constitute legal advice. They are general comments on the circumstances presented, and may not be applicable to your situation. For legal advice on which you may rely consult your own lawyer.

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2 comments

Thomas Richelo

Thomas Richelo

Posted

Arnold, you make a good point about starting with the AIA forms. They are too detailed for some matters but in other instances they resolve a lot of concerns, largely because they are predictable and attempt to mirror "custom of the industry." When clients come to me asking for simple contracts I sometime start with a form and then ask them what the consider to be the other party's tolerance for negotiation. Then I may suggest, 'these are the top five things that can benefit you,' or the top ten, etc. Clients need to be informed that there is no perfect contract but it is rare that having something in writing will not be an improvement over no written contract at all.

Arnold Garson Cohen

Arnold Garson Cohen

Posted

The 'top ten' is a good negotiation strategy. And I agree that initially weighing the pluses and minuses with the client is essential although I find that many clients have little tolerance for that process also. I get concerned, though, if 11 and 12 fall through the cracks and the project winds up in litigation. There is no perfect contract and no perfect way to manage client expectations. The best results come with clients who want to think with the lawyer after they know that the lawyer understands the client's mission.

Posted

I agree with the other answers. You're entering a for-profit business endeavor, so the contract that governs the terms should be considered an investment/expense that's necessary to maximize value or protect your interest in the enterprise. I've seen clients literally have to spend hundreds of thousands of dollars in litigation because they trusted Google to find contracts. Don't fall into the trap.

If you want to avoid the transaction cost as much as possible, my suggestion is to do one of two things: (i) draft a term sheet that includes all the key provisions, and then let a lawyer insert these terms into a prevously relied upon template; or (ii) use all the resources available to draft a workable contract, and then pay a lawyer to review/modify the contract to make sure your interests are adequately protected. These measures should give you a benefit, but keep costs down at the same time. Best of luck.

This answer does not create an attorney-client relationship. This answer is not legal advice and must not be construed as such.

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Arnold Garson Cohen

Arnold Garson Cohen

Posted

I tend to agree, but I personally find it more time consuming to review and change a client's contract form than to do my own very often. I much prefer the term sheet approach.

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