Construction

contracts
Advance Construction Method and Equipment
PC 2
Contract
 A contract is basically an agreement between two parties creating a legal
obligation for both of them to perform specific acts. In order for the
contract to be enforceable, each party must exchange something of
value (called “consideration”).
 They may be either oral or written, though courts prefer that
agreements be put in writing.

Construction Contract
 A construction contract is a legal agreement between contractors
and clients that presents, in detail, the specifications and terms of
a project. Unlike other industries, a construction contract isn’t one
single document. Instead, it’s a collection of documents prepared
by a number of different parties that present the specifications and
terms of a project.
HOW CAN A CONTRACT BE BREACHED?

The entire formation of the contract begins with negotiations and may
undergo several modifications before a final agreement is reached.
This means that there are several points in time when the contract may be
breached.
A breach of contract means that one or both parties has failed to perform
their duty.
A breach may either be total or partial, and each will yield different legal
consequences.
WHAT ARE CONSTRUCTION CONTRACT DOCUMENTS?
▪ The 9 essential contract documents
1. THE CONSTRUCTION AGREEMENT
• The agreement is the most fundamental document in a construction contract bundle. This is
basically “the contract,” a foundation that the rest of the project details are built upon. This
document will set out the general purpose of the contract and the contract price.
The most common types of construction contracts include:
•Time and Materials
•Lump-Sum
•Unit-Price
•Cost-Plus

2. GENERAL CONDITIONS
• General conditions are essentially the framework of the construction contract documents. They
provide the “hows” of the project.

3. SPECIAL CONDITIONS

• Special conditions are typically an addition or amendment to the general conditions section. This
document will detail the specific clauses and conditions for each task or project. For example,
special conditions will include specific instructions that only apply to one job or portion of the build.
 special conditions

4. SCOPE OF WORK
• A clearly defined scope of work, also known as a statement of work, is a crucial
element of a construction contract. This document will describe, in detail, the precise
tasks and objectives of each contractor.
5. DRAWING
• Every construction project should include a set of drawings or blueprints. Drawings
provide a simple overview of the project as a whole. The architect or construction
manager should present these to contractors before any construction activities begin.

• Sample of drawing plans

6. SPECIFICATIONS
• The section for construction specifications contains all the technical data and performance
requirements. The specs should detail the materials and techniques the contractors must use on any
given task. It will outline all the quality standards, acceptable materials, and any quality testing
necessary to ensure compliance.
7. BILL OF QUANTITIES
• A bill of quantities isn’t optional on some contracts, but it can be helpful.
A bill of quantities is an itemized list of the various materials, parts, and labor required. This list is
typically provided during the bidding process.

8. CONSTRUCTION SCHEDULE
• A well-formulated construction schedule requires close attention to detail. Any updates should be readily
accessible to everyone on the project.

9. SCHEDULE OF VALUES
• A schedule of values is provided by a contractor and lists all the work items from start to finish. It will
allocate the entire contract sum among the various portions of the work. The schedule of values is also a
useful management tool to form the basis for submitting and reviewing progress payments. This document
can help keep the cash flowing and bills paid on time.
What happens when construction contract documents conflict?

A wide variety of project participants contribute to construction contracts, often leading to inconsistencies and conflicts
between them.

Anytime there are conflicting provisions in a contract, there should be an established totem pole of priority to determine
which provision in which document will prevail. Therefore, many contracts include an”order of precedence clause” that
deals specifically with this issue.

A standard order of precedence will typically flow from highest priority to lowest priority:

 Change orders
 The agreement
 Special conditions
 General conditions
 Specifications
 Drawings
 Any other documents that form the contract documents
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5
Group 6
Jame Patrick Ballestra Baldovino
Donald Tandoy
Rodelyn S. Nortez