As a general contractor, it is essential to understand the various legal terms that may come up during your job. These terms serve as your protection against any legal issues that may arise during the construction process. Here are some general contractor legal terms that you should familiarize yourself with:
1. Contract
A contract is a legally binding agreement between two or more parties. As a general contractor, you should always have a written contract that outlines the terms of your agreement with your client. The contract should detail the scope of work, payment terms, project timelines, and any other necessary provisions.
2. Indemnification
Indemnification is a contractual agreement that requires one party to compensate the other party for any losses or damages that may arise during the project. It is a common clause in construction contracts and serves as a form of risk management for both parties.
3. Arbitration
Arbitration is a dispute resolution process that is an alternative to litigation. It involves a neutral third party who helps the parties reach a resolution. Arbitration can be less time-consuming and costly than going to court, but it is important to ensure that the arbitration clause in your contract is clear and comprehensive.
4. Lien
A lien is a legal claim against a property that is used as collateral for a debt. As a general contractor, you may have the right to file a mechanic`s lien against a property if your client does not pay you for your work. Mechanic`s liens vary by state, so it is important to understand the laws in your state.
5. Change Order
A change order is a written document that outlines any changes to the original contract. These changes could be due to design alterations, unforeseen circumstances, or client requests. It is important to have a change order in writing to avoid any misunderstandings or disputes.
6. Warranty
A warranty is a guarantee that the work you have done will meet certain standards. It is important to include a warranty clause in your contract to protect yourself against any potential claims against the quality of your work.
In conclusion, as a general contractor, it is important to familiarize yourself with these legal terms to avoid any potential legal issues during your construction project. It is always recommended to consult with a legal professional to ensure that your contracts are comprehensive and legally sound.