Why Construction Agreements Are Not Contracts

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In a highly changing environment, selecting the correct construction contract has become an essential aspect of having a prosperous project. Contracts have developed into a tool that project owners use to protect their resources and control costs.

The failure of proper contract agreements in construction projects can lead the concerning parties to pay some unforeseen costs as they are needed to devote some significant amount of time, cost and efforts. Due to this reason, it becomes quite essential for management of projects to undertake some cautious consideration with the type of contract. The correct construction contract for a project can be critical to its success. 2. WHY CONTRACTS ARE USED

Each construction project has its specific …show more content…

Though verbal contracts can be utilised, all large businesses use official written contracts when starting in an operation [3]. Documented contracts offer individuals and businesses with a legal document communicating the responsibilities of both parties and how conflicting situations will be resolved. These written documents, contracts, are legally enforced in a court of law [1]. Contracts often are used as a tool that businesses use to protect their assets.

Business contracts normally contain a discussion process in which numerous terms are agreed on to which each party must follow. The discussion process may take a small amount or a large amount of time, depending on the contract and the contractual obligation of each party. Contracts also can contain a process for making variations or addendums to the contract. Companies often utilise contracts to safeguard that a certain amount of service is upheld or that competing companies do not have the right to use specific economic resources [3].

Contracts are utilised and are important for the following …show more content…

Being aware and knowing the rights and responsibilities decreases the chance of a disagreement; and, if a disagreement does rise, a contract offers the information for its resolution [6]. Disagreements are frequently resolved through negotiation (the parties talk over the problem with a mediator and come up with an agreed resolution), arbitration (the parties submit their problems to an arbiter who makes the judgement) or by a court (the parties debate their case in front of a judge). Any verdict on breaches will hinge on the nature of the dispute and the resolution sought. For example, the mistreated party may be paid reimbursement for the loss or the defaulting party may be forced to finish their obligations under the

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