Create an Agreed-Upon Deadline
For the fifth of the Top 10 Considerations for Construction Contracts, let’s talk about creating a timeline for your project. (Previous posts have covered What’s First When Creating a Construction Contract, Defining Your Scope of Work in a Construction Contract, What Type of Contract is Best for You and How and When to Get Paid on Your Contract.)
Owners often want projects finished by a set deadline and will ask for a completion date to be included in the contract. Although you may have every intention of completing the project on schedule, we don’t have to tell you that there are numerous issues that can arise during the course of the project that may preclude timely completion. A contract that’s vague about completion consequences and extenuating circumstances will almost surely lead to disagreements (and unhappy clients).
First, it's very important to clearly identify the circumstances that will excuse timely performance. Typical circumstances include things beyond the contractor’s control like weather delays, governmental issues, and materials shortages. Although it might seem obvious to a contractor that these issues will delay a project, it isn’t necessarily obvious to a client who is anxious for the job to be done. If your contract doesn’t clearly state these exceptions, you could still be held responsible for not completing the work on time.
Another thing that should excuse completion within the original time frame is any owner-requested change orders. The additional time to complete the new work in a change order should be added to the total time to complete the project. This should be made clear to the client upon agreeing on the change. And the best way to document this is to specify the additional time in the change order. For instance, if the change order will add an estimated two weeks to the project (due to materials procurement, additional labor, etc.), then the change order should include a provision that the project completion timeline is being extended for two additional weeks. The owner should sign off on the change order to acknowledge this contract amendment.
Finally, it’s important to note how a court views disputes about timely completion. Although a contract may specify a completion deadline, it typically does not specify any penalties for failing to meet this deadline. This makes it difficult for an owner to claim monetary damages due to the breach since a party who breaches a contract is typically only responsible for any direct and foreseeable damages resulting from the breach (and it's hard to determine how to quantify any direct or foreseeable damage from a small time delay). Thus, an owner typically lacks any real legal recourse unless your contract specifies a per day (or other) monetary penalty for non-completion.
Ultimately, including a time to complete in your construction contract is something your client will likely expect, but should be carefully considered to avoid potential misunderstandings. If you need help creating or reviewing a construction contract, contact us right away! And should you find yourself in a contractual dispute during a construction project, Downs Law has the expertise to help you resolve the conflict. Contact us today and get the help you need!