Question

draft a simple contract for a small construction project (remodeling a kitchen for instance) under which the homeowner hires a independent contractor to do the work. Consider three points of view, the homeowner, the contractor, and the subcontractor. What clauses would each party want in his/her contract to assure satisfactory performance by the others? What recourse would each party have if the others did not perform?

Answer 1

AGREEMENT BETWEEN OWNER AND CONTRACTOR

THE WORK – this should include the project description (in this case the kitchen remodelling), thoroughly outlining the work, material and the products that will go into the job. All demolitions and constructions should be included here, with a construction drawing to clearly define the scope. The owner should ensure that the work definition should include disposing off the debris and the project is covered by his liability and workman’s compensation insurance.

The Contractor shall:

(a)        perform all the Work required by the Contract Documents for _______________________ _____________________________________________. (See Tender Form for Description) which have been signed in triplicate by both the parties,

(b)        do and fulfil everything indicated by this Agreement, and

(c)        commence the Work by the              day of                        , 20      and substantially perform the Work of this Contract as certified by the Engineer/Architect by the _______ day of _________ 20 .

(d)        The "Engineer/Architect" is the person designated as such from time to time by the Owner.

CONTRACT DOCUMENTS

-       In the form an Annexure- all list of documents and drawings

CONTRACT PRICE

THE CONTRACT PRICE IS _______________ (inclusive of all taxes).

PAYMENT

(a)        Subject to applicable legislation and, where such legislation does not exist or apply, in accordance with such prescribed regulations or industry practice respecting holdback percentages and in accordance with the provisions of the General Conditions of the Contract, the Owner shall:

(1) make monthly payments to the Contractor on account of the Contract Price. The amounts of such payments shall be as certified by the Engineer/Architect; and

(2) upon Substantial Performance of the work as certified by the Engineer/Architect pay to the contractor any unpaid balance of holdback monies then due; and

(3) upon Total Performance of the Work as certified by the Engineer/Architect pay to the contractor any unpaid balance of the Contract Price then due.

Also, outline the timing and amount of instalments paid based on project milestones. Additionally, the contractor and sub-contractor should provide you with a “lien waiver”, which is an invoice to be shared after each payment with a signed statement that the previous payment made was used to pay for the labor and material described in the invoice. This is a form of legal protection against liens.

(b)   If the Owner fails to make payments to the Contractor as they become due under the terms of this Contract or in any award by a court, interest at the rate x %shall become due and payable until payment. Such interest shall be calculated and added to any unpaid amounts monthly.

ADDRESSES FOR NOTICES

All communications in writing between the parties or between them and the Engineer/Architect shall be deemed to have been received by the addressee if delivered to the individual or to a member of the firm or to an officer of the Corporation for whom they are intended or if sent by post or by facsimile addressed as follows:

The Owner at

The Contractor at:                   

The Sub-Contractor at:

The Engineer/Architect at:

SUCCESSION

The General Conditions of the Contract hereto annexed, and all other aforesaid Contract Documents, are all to be read into and form part of this Agreement and the whole shall constitute the Contract between the parties and subject to law and the provisions of the Contract Documents shall ensure to the benefit of and be binding upon the parties hereto, their respective heirs, legal representatives, successors and assigns.

IN WITNESS WHEREOF the parties hereto have executed this Agreement under their respective corporate seals and by the hands of their proper officers hereunto duly authorized.

SIGNED, SEALED AND DELIVERED (signatures of the concerned parties)