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The Importance of Written Contracts in Construction Work

When it comes to commercial construction work oftentimes there are several subcontractors on a project. If a third-party is injured on a project or the project has defects, frequently litigation ensues. Having written contracts with all the subcontractors is extremely helpful to a general contractor in determining whether a subcontractor or multiple subcontractors may be responsible. Written contracts should not only include the scope of work etc. but if a general contractor should seek to be indemnified for a loss caused by a subcontractor, the terms of the indemnification clause are key in showing the extent to which the subcontractor must indemnify the general contractor for any particular loss.

If a subcontractor is going to be asked to provide insurance coverage for personal injuries of third-parties for example, the extent of the insurance requirements need to be spelled out in a written contract so that the subcontractor can take that to its insurer and obtain the required coverage. These are just two examples of how helpful a written contract can be if litigation ensues covering a commercial construction or a residential construction project.

With respect to Home Improvements when it comes to third parties supplying labor, services, materials etc., Indiana recently added a section to Ind. Code § 24-5-11-10 which covers what all must be in the written Home Improvement Contract. The section at issue (9) which was added in June 30, 2017 requires that the contract advise the homeowner that a third party such as a subcontractor if not a party to the contract will be supplying labor etc. Ind. Code § 24-5-11-10 is very detailed with respect to everything that a home improvement contract (which must be in writing) must contain and other sections of Ind. Code § 24-5-11-1 et seq. should be consulted for information on what a real property improvement is and the rights of which a consumer must be informed. Violations of the Home Improvement Contracts Act carry significant penalties.

For more information on written contracts in the construction arena and how they can protect your business contact the attorneys at the law firm of Fine & Hatfield, A Professional Corporation.


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