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Considerations: A crucial concept in construction contracts

When you hire someone to do construction work for you, chances are good that you will have to sign a construction contract with that company or individual. You should make sure that you read over the terms of the contract carefully so that you know what types of remedies and limitations there are for the project.

One thing that you must review are the considerations. Considerations are what you provide to an entity or person in exchange for something, e.g., money for construction of a home or building. For instance, if you agree to pay the contractor $30,000 to build a new addition on your home, a consideration exists. If the contractor agrees to build a new addition to your home but you don't agree to pay anything, there isn't a consideration.

You should know that a consideration doesn't have to be monetary. For example, if the contractor agrees to build the addition to your home in exchange for your handling the marketing of the contractor's business for a specific amount of time, a consideration is present.

The terms of consideration are vital to double-check when you sign a construction contract. Make sure that the specific terms that you agreed to are present in the contract that you sign to avoid future litigation.

If something happens and the contract isn't fulfilled, you might be able to take legal action. This is only possible if there is a consideration in place in the contract. Without that consideration, the contract is considered a gratuitous promise. Typically, you can't do anything if a gratuitous promise isn't completed.

Source: FindLaw, "Do Construction Contracts Require Consideration?," accessed Oct. 05, 2017

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