Construction law can be complex, and various disputes may arise between parties. Below, we define terms commonly used in construction law and construction contracts.
There may be two types of abandonment in construction law. Contract abandonment occurs when each party has conducted themselves in a way that the original contract is no longer valid, and both parties may choose to abandon the agreement mutually. Abandonment may also occur when a contractor’s performance of work fails. For instance, they may fail to start the work on time or fail to complete the work. If abandonment of a project occurs, legal recourse may be available.
A claim made against a property by a contractor, or other professional supplier of materials or labour, to protect contractors or other professionals from non-payment by the owner.
A term which describes how requested changes to the project will be communicated between the parties, including information relating to additional fees for Change Orders and timelines for when changes may be requested.
A change order is a written document often signed by both the owner and contractor which sets out an agreed-upon change to the scope of the work to be performed, the contract time, or the contract sum.
An agreed date stated in the contract for the completion of the project.
A written agreement between an owner (client) and a contractor regarding a specific work project.
Various documents which relate to the work being done, including but not limited to blueprints, drawings, and designs.
A type of contract that requires the owner to pay the actual cost of materials, labour and any other necessary expenses, in addition to a fixed rate or percentage of the total cost.
A default is the failure of a party to perform a specific term of the contract.
Description of Work
A written outline of the scope of work to be completed on the project. The description may include various details, including plans, measurements, specifications, and the allocation of portions of work to subcontractors. The description of work will often include information regarding who will complete certain parts of the work, how the work will be completed, and what materials are required to complete the work.
A contract term setting out the acceptable methods to be used for resolving disputes which may arise before, during, or after the completion of the construction contract. These methods may include mediation, arbitration, or adjudication.
A contract whereby the owner pays a set price for all materials, labour, and services to be provided.
The company or individual named in the construction contract who is responsible for overseeing the construction process. The general contractor is also responsible for overseeing and managing subcontractors.
The owner’s right to inspect the work to ensure that it is being completed under the terms of the contract.
Each respective party is responsible for obtaining appropriate insurance policies to protect against damages and losses. The insurance policy contract term may set out a minimum policy coverage value.
The physical location of where the work is to be performed, specified by either an address or a description of the location.
A claimant’s right to maintain possession of an owner’s property as collateral until the owner’s debt to the claimant has been discharged. A lien’s purpose is to protect contractors from completing work without being paid when payments become due.
Work which does not meet the specific requirements for the project as set out in the construction contract.
Notice is a term in the contract which states how the parties to the contract are to communicate with the other. Often, notice requirements will stipulate that the communication is to be in writing and will prescribe specific terms and timelines with which the communications must abide.
The client (company or individual) hiring the contractor to have a construction project completed.
A term referring to the contractual practice of the owner paying the contractor in installments for the work completed up to that point. This may be done either at various stages in the construction process for completion of the work or when the contractor submits an invoice.
A term referring to the project manager who is responsible for overseeing the completion of the work, managing relationships between the parties, and helping guide the work to meet the owner’s requirements.
A percentage of each contract payment withheld by the owner to ensure that the contract is fully performed. The contractor pays the retention amount after the contract is complete.
Scope of Work
A written document that defines the actual work to be completed on the project.
A primary contractor hires a subcontractor to perform specific tasks which are part of the overall project. In turn, a subcontractor may hire sub-subcontractors to help complete the subcontractor’s work.
A contract may be terminated if one party stops work due to a failure by the other party to perform their obligations.
Terms and Conditions
A portion of the construction contract containing clauses regarding the rights and responsibilities of both the owner and the contractor, including the legal framework governing the contract. These terms and conditions will often include information about liens, retention/withholdings, penalties, and methods of dispute resolution.
Time and Material
Terms in a contract setting out a pre-negotiated price of what the owner will pay the contractor for the required material and labour. This rate is higher than what the contractor will pay for staff and materials.
A contract may become unenforceable if a certain statutory or legal requirement has not been fulfilled.
An express warranty can last for one year from the completion of the substantial performance under the contract. An implied warranty is mutually understood to be in effect despite the term not being in writing.
During the warranty’s coverage, the work provided by the general contractor will be free from any material defects.
Contact DBH Law in Calgary for Comprehensive Construction Law Advice
The trusted construction lawyers at DBH Law have extensive experience and technical knowledge to guide clients in the modern construction industry. Our team can help draft thorough agreements and ensure our clients understand their rights and obligations pertaining to a project. Our lawyers will assist in representing your interests in construction disputes when necessary. To schedule a confidential consultation, call us at 403-252-9937 or reach out to us online.