When Florida builders sign a construction contract, they enter a legally binding agreement with the owner that a certain amount of compensation will be received for the executed project. There may also specifications for the manner in which the compensation will be disbursed. While there are many types of construction contracts, construction professionals tend to use certain types more than others.
The definition of a construction contract type is usually determined by the manner in which the disbursement will be made. The contract also provides other details, such as the expected duration of the project, specifications, quality expectations and more. For every major contract type, there are many variations that can be created, allowing builders to develop a customized agreement that can address the specific issues.
A fixed price or lump sum contract evolves around total fixed price for all construction activities. The contract can detail benefits or incentives for finishing the project early as well as penalties, or liquidated damages, for not finishing it on time. Lump sum contracts are ideal in situations in which a clearly defined schedule and the scope of the project have been reviewed and approved by both parties.
Another feature of the lump sum contract is that it is used when the builder is to the assume the risk for the job, and the owner wants to prevent the builder from charging for unspecified work. However, the owner will have to pay a certain amount to compensate the builder carrying that risk.
An attorney who practices commercial construction law may assist builders with resolving contract disputes, such as those regarding terms of payment. The attorney may consider the factors of a case and may recommend litigation to hold the responsible parties responsible.