Courts recognize written agreements between parties involved in a construction project. Although some limited circumstances might legally allow two parties to forgo a written agreement, verbal agreements provide courts with nothing to base decisions on if a dispute arises. In the majority of business deals, the law requires contractors and their business associates to develop written contracts. Value and term length play an important role in the requirement to make an agreement in writing.
The state’s statute of frauds calls for the parties in a construction project to always prepare a formal written contract for any construction financing agreements. Building projects that will take more than one year to finish must also use a contract as well as any situation that involves the sale of real property. Finally, any transaction that involves construction materials with a value over $500 needs the terms put into writing.
The legal obligation to enter a written agreement does not mean that the parties cannot alter the terms of the deal. The original contract should include clauses that specify how to amend the document. These amendments must be written and executed by the parties involved. Any amendments and the original contract will form the entirety of the agreement. In the event that a problem emerges, a court will interpret the written agreement to make a decision.
Because a well-planned contract could prevent disputes and produce clear understanding between the parties, legal advice is often appropriate when writing or amending a construction contract. A construction or property management company could ask an attorney who practices construction law to review contract language concerning a building or renovation project. An attorney could suggest how to improve clarity and protect the client from liabilities. When necessary, an attorney could manage negotiations and help the parties come to terms.