I often hear this advice given to the novice builder. “Just read your contract,” goes the advice. Don’t get me wrong, no builder should build without first reading the contract. But that doesn’t make it good advice. “Just read your contract,” is poor advice. Let me explain.
Read a specification for a thing and whatever you need to know about the thing – its materials, installation methods, testing, performance – is either written in the specification or in a document referenced by the specification. If anything is missing, you can write a request for information. You should be able get whatever you need to know so that you know exactly what is expected of you. Specifications may be lengthy, and they may be difficult to understand. But if you are diligent, they will tell you everything that you need to know.
Contracts do not read like specifications.
A contract expresses legal rights and duties. But some legal rights and duties arise not because they are expressed in the words of the contract but because they are found in construction contract law. Such legal rights and duties are enforceable as if they were written in the contract. For example, suppose the writing says, “completion of the work by a certain date is the essence of this agreement.” That said, however, this contract says nothing about either liquidated damages or any other consequences for late completion. The novice might think that this is a good thing. There are no consequences. The novice says, “I’ll do my best, but if I’m late, I’m late.” The experienced builder understands that there are unwritten consequences. The law will hold the builder liable for actual damages for late completion. Actual damages for late completion don’t need to be, and usually aren’t, written in the words of the contract.
Some contract clauses might be at odds with the law. Such clauses are unenforceable or unlawful. For example, the contractor can insist on a contractual clause that excuses all liability for damages due to defects that are discovered after final inspection. This clause can be written, but it will not be enforced. In most states, contractors are liable for latent defects that result in serious injury or death, no matter how long after construction the injury or death occurs. A contractor cannot escape this liability. Its why contractors buy insurance. The lesson to be learned here is that you can’t change the law just because the two of you have agreed to change it in your contract.
“Just read your contract,” is poor advice. Better advice is, “First learn about construction contract law. Then read your contract.”
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