When you’re starting a new construction project, there’s one thing that can either protect you or expose you to disastrous consequences in equal measure—a well-drafted written contract.
At Bachara Construction Law Group, we’ve seen time and time again just how vital these contracts can be in resolving disputes, defining responsibilities, and safeguarding financial interests.
Simply put, a written contract isn’t just paperwork—it represents peace of mind, financial security, and much more.
Are Written Contracts Required By Law?
In Florida, not all contracts need to be in writing to be legally binding. This means construction agreements can technically be oral or written. However, you’re leaving far too much to chance if you rely on a handshake or a phone call. Without a solid paper trail, it can be challenging, if not impossible, to prove key details that are likely to arise over scope, timeline, or budget.
Written contracts go far beyond memorializing the terms and instead, can give you the tools you need to protect yourself and your business.
If you’re a contractor in Jacksonville, Tampa Bay, or beyond, having a solid written agreement is a must for traversing the murky complexities of construction law. If you want a construction trial lawyer to be able to have your back if and when things go south, then starting with a good contract is half the battle.
Why Written Contracts Matter
First and foremost, written contracts bring clarity to both sides of the table. They outline expectations for both parties, from the scope of work to payment schedules. No more “he said, she said”—everything your contract defines is black-and-white.
Here’s another important point: legal disputes in construction often boil down to misunderstandings about deliverables or performance. Without a written agreement, conversations can be misremembered or interpreted differently, creating massive confusion.
But, when you have a detailed written contract, you and your clients are both held accountable.
At Bachara Construction Law Group, the go-to Tampa construction lawyer, we also like to think about contracts as a map. A well-drafted agreement guides you—from project startup to completion—so you know exactly where you stand. And when you’re dealing with serious negotiations or litigation down the line, that clarity can save you time, money, and headaches.
Types of Construction Contracts
When you start drafting your contract, knowing the right format is key. Different types of construction contracts come with their own advantages—and yes, risks. Below are some of the most common options contractors and owners rely on.
Cost-Plus
A cost-plus contract is an agreement where the project owner pays for all construction costs plus an additional sum for the contractor’s overhead and profit. Think of it as an open budget model with a bit of trust sprinkled in—trust that the contractor will act responsibly when choosing subcontractors, materials, and suppliers.
While this format offers flexibility, it can become expensive for the owner if there’s no cost control. That’s why it’s so important for contractors to keep detailed records of expenses to justify every cost to the owner. Any hint of sloppy documentation on your end can easily snowball into disputes or damaged trust (which can easily snowball into a damaged reputation).This type of contract works well for projects where flexibility is needed, but as with any agreement, both parties need to go in with their eyes wide open. And if complications in the relationship occur, as experienced litigators, we’ve seen how much easier things are when you have a well-documented case.
Lump Sum
With lump sum contracts, it’s what it sounds like—the contractor agrees to complete all project requirements for a pre-negotiated, fixed price. It sounds straightforward, but not so fast.
While lump sum contracts offer clarity and reduced risk for owners, they place considerable pressure on contractors. You’re essentially agreeing to deliver the project no matter how prices fluctuate or materials escalate in cost during the process.
If you’re a contractor considering using a lump sum contract, you’ll need to think ahead (and ideally, get the advice of a Florida construction lawyer before you put anything in print).
Solid bids from subcontractors and suppliers are critical here. One costly slip-up—and we’ve seen it happen—can wipe out your profit margin.
If cost overruns occur a year into the project because subcontractor bids weren’t locked in, guess who’s on the hook for that? It’s you. That’s why, when we represent and advise contractors, we make sure the scope of work is defined down to the smallest detail.
On the flip side, when we’re negotiating on behalf of owners, we tend to push for language that includes everything reasonably implied by project plans, even if not shown explicitly. These nuances make a world of difference when it comes to disputes.
Cost-Plus with GMP
A cost-plus with GMP contract offers a bit more balance for both parties involved. The project owner gets the benefits of a flexible cost-plus model and the protected cap of a maximum guaranteed price. Contractors, however, need to approach these contracts carefully.
Put simply, when crafting that ultimate GMP number, you’ll need to remember to include padding for price fluctuations and track everything meticulously.
GMPs are especially attractive to owners with strict budgets or financing requirements from financing institutions. For contractors, this just underscores the necessity of meticulous pricing and understanding the scope of work before signing the dotted line. Pro tip? Have a trusted construction law attorney review the specifics before finalizing your costs.
CM at Risk
CM at Risk is quickly becoming a popular contract option in the construction world and it’s something we’re seeing more with Bachara’s construction law services. This agreement allows a construction manager to act as a general contractor while shouldering responsibility for the project’s timeline and budget.
These agreements are more nuanced than traditional contracts and tend to be highly collaborative. From our perspective as legal advisors, they work particularly well when an expert hand is needed to balance complex stakeholder interests.
What Do We Mean By “Scope of Work”?
The main reason why you need a contract in writing is so that the scope of work is clearly described, but what exactly does this mean?
Put simply, this outlines what you (or your subcontractor) are responsible for doing. It sounds simple, but unfortunately, this is one of the most common areas where disputes arise.
A vague scope of work can easily be interpreted differently by different parties. You think you’re only responsible for installing cabinets; the other party thinks you’re also painting them. Suddenly, you’ve got a pricey argument on your hands.
Get everything in writing. The more specific, the better. Outline exactly what’s included, from materials to labor. And if there’s anything that falls outside of your responsibilities, make sure that’s crystal clear, too, and clearly delineate which (if any) subcontractors are responsible for what. After all, it’s always easier to clarify expectations upfront than to deal with headaches later on.
What Can Contractors and Subcontractors Do To Protect Themselves in a Written Contract?
We know what you’re thinking—contracts are long, dense, and, frankly, boring. But don’t skimp on reading (or understanding) them. A well-drafted contract can save you thousands of dollars and a ton of stress. Here’s what you can do to protect yourself as a contractor or subcontractor.
“Risk Shifting” and Insurance Requirements
One of the biggest ways contracts protect parties is through risk-shifting. Essentially, this means outlining who is responsible for what kinds of risks, but it might not always be what you expect.
For example, does your contract require specific types of insurance? If not, it should. General liability policies, builder’s risk insurance, and workers’ comp are a no-brainer. But what about auto insurance for vehicles traveling to job sites or additional policies that cover unforeseen property damage? Don’t skimp here. If your contract doesn’t clearly define insurance requirements, you’ve already got a few red flags waving for both parties involved.
Defense and Indemnity Clauses
These clauses outline who has to cover legal costs if something goes wrong.
General contractors often include indemnity clauses to make sure subcontractors carry the burden of lawsuits or claims arising from their own work. However, these clauses need to be fair and balanced, so you’re not taking on risk outside your control.
“Flow-Down” Clauses
If you’re a subcontractor, keep a close eye on flow-down clauses. These bind you to the same terms as the general contractor’s agreements with the project owner.
While they can streamline responsibilities, they can also hurt you if those upstream terms are particularly unfavorable. Always read them carefully and negotiate when it’s necessary.
Dispute Resolution
You might not think about disputes while signing a contract—but you should. In any kind of contract, you should plan for the worst and hope for the best.
In this case, litigation and arbitration are two typical dispute resolution methods. Each has its pros and cons.
Litigation costs can spiral quickly, but it’s public and thorough. Arbitration, on the other hand, is private and often quicker—but it tends to be more expensive upfront.
Consider not just the resolution process but also attorneys’ fees. Should they be recoverable in the contract, or will you rely solely on lien law? These are the questions you’ll want to answer before disputes arise.
How Can Contractors Protect Themselves from “Killer Contract Clauses”?
“Killer contract clauses” sound dramatic, but they’re a real concern. These are clauses that seem harmless at first but could cost you big time if things go sideways. Here are a few you should watch out for.
Liquidated Damages for Delays
This clause sets a predetermined amount you’ll owe if you don’t complete the job on time.
Sounds fair in theory—but what happens if delays are caused by the client, weather, or a global supply chain crisis? If liquidated damages aren’t balanced with reasonable exceptions, these clauses can create more harm than good.
“Pay-If-Paid” Clauses
The dreaded “pay-if-paid” clause. As a subcontractor, this means you won’t get paid until the general contractor gets paid.
While this might work fine on paper, it can create cash flow challenges for a subcontractor, especially if your scope of work occurs at the beginning of a very lengthy overall construction process. Before agreeing, make sure you consult a Florida construction lawyer to understand the potential consequences.
Attorney’s Fee Provisions
Carefully consider whether you want attorney fee shifting in or out of your contract. Depending on your role in the project, there are good reasons for adding or deleting attorney’s fee provisions.
Hire Bachara Construction Law Group: Construction Litigation Firm in Florida
Stop Googling “construction law firm near me” if you’re trying to find the best construction lawyer to handle your next round of contracts.
By now, you know why contracts matter. Whether you’re a contractor in Tampa, St. Pete, or Jacksonville, weeding through the complexities of construction law requires a strong foundation—and written contracts provide just that. They protect your work, your wallet, and most importantly, your reputation.
Now, all that’s left is finding a construction litigation lawyer with trial experience who can also serve as a construction contract lawyer so you never have to deal with the headache of a trial in the first place. That’s where we come in.
At Bachara Construction Law Group, we specialize in crafting robust contracts for construction professionals. Whether you’re planning your next big project or dealing with a dispute, we can provide expert legal guidance to help you stay ahead.
Looking for the best construction lawyer in Jacksonville or Tampa Bay? Reach out to Bachara Construction Law Group to see how our team of construction attorneys can help you today.
Schedule your construction law consultation now!