All about contract provisions, payment schedules, subcontractor contracts, and how to get started when you’re writing a contract from scratch.

Caleb writes: Good morning, Patrick,

I’m a small contractor in Northwest Montana, I’ve been in business for several years now. As time has gone by and the projects have gotten larger, I’ve come to realize the importance of the business side of the company.

I’ll be taking on my first home build in the upcoming months, providing management and a fair amount of labor on the project. My question for you and the podcast team today is what should be in a contract between myself as the general contractor, and the clients, also one between myself and subcontractors? I’ve never required a contract in the past, and have never had any issues, however a project of this scope certainly requires one, and as the business moves forward, I like the idea of a contract for my peace of mind and the clients.

There are obvious points that need to be addressed in a contract: payment, scope of work, completion date, but I was wondering if there were any overlooked items that you all though may be important. I’ve been warned by some of my fellow contractors that while a contract binds clients and subs to certain guidelines, it binds me as well. While I have no intention of doing anything but the best by my clients, I’m curious if there are clauses that should be avoided.

Thanks for any advice you can offer.

Ian’s Basic Contract Provisions:

• Start Date
• Description of the work
• Project Schedule
• Price, payment schedule
• Payment terms
• Change Order Procedure
• Exclusions
• Close out procedure
• Warranty
• Termination clause
• Disclosures
  — Lien
  — Construction Defect
  — Recovery Fund if applicable
  — Municipal Disclosure
• How will issues be handled? Arbitration? Court?

Related Links:

• Elements of a Good Residential Building Contract
• Podcast 579: Members-only Aftershow — Contractor Licensing
• Podcast 541: Members-only Aftershow — Choosing Contractors and Clients

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The Fine Homebuilding Podcast embodies Fine Homebuilding magazine’s commitment to the preservation of craftsmanship and the advancement of home performance in residential construction. The show is an informal but vigorous conversation about the techniques and principles that allow listeners to master their design and building challenges.

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Other related links

• • All FHB podcast show notes: FineHomebuilding Podcast.
  • All FHB PROTALK podcast show notes: FineHomebuilding ProTalk Podcast.