Legal Aspects of Construction Business: Every Contractor Should Know About

By: John | Date Posted: February 24, 2022

Every construction business needs to know about the legal side of things when it comes to their contracts with customers. It is just not possible for any contractor in the field to open up shop and advertise themselves as a company without understanding how important it is to have solid contracts with your clients in place. Contract law tells us that every time there is an agreement between two or more people, we have what is called a legal contract. The law requires that all contracts follow the rules and laws of the land and so each state has its own set of laws and policies on how construction contracts should be written. Many contract templates online could serve as a base for the contract that needs to be created. Highlighted are the legal aspects of the construction business every contractor should know about.

Legal Aspects of the Construction Business

Building Regulations

This is a set of rules that are made by the government to ensure safety in all construction. It can vary from industry to industry, but generally, it will include material standardization, structural integrity testing, and building airtightness. If you fail to meet these requirements you will need to apply for planning permission or make alterations to the property before continuing with the construction work.

These regulations are usually set out by the local authority. A noncompliance with any of these regulations is a criminal offense and can result in heavy fines or even imprisonment of several years if this results in death or serious injury of an individual.

Insurance For A Construction Based Business

More than just liability insurance, construction businesses are always under more pressure to ensure that they do not end up in legal disputes more than any other type of business. That’s why it’s more important for construction businesses to understand the various types of insurance available and their possible limitations. You can read more on about the different types of insurance that you can purchase for your construction business. It is important to make an informed decision when choosing the right insurance policy.

Consumer Protection

Consumer Protection

It is the law to protect people who do not know more about construction and its processes. More often than not, clients are on a more disadvantaged side because they lack knowledge of what goes on in the market. This means that it is more likely for them to fall prey to predators.

It has been noted that homeowners have lost over $7 billion to swindlers, this accounts for more than 30% of all complaints. Consequently, the law lets you sue a contractor who has defrauded you as a result of poor or deficient workmanship within three years from the time it occurred. It also empowers consumer courts to award compensation estimated with reference to the seriousness of the harm.

Employment Legislation

In the United Kingdom, employment is a relationship between an employee and an employer. The terms of employment are not fixed by law but by the contract between the workman and his employer. In case of any dispute, a third party will consider whether a contract of service exists or alternatively that there has been an independent contractor agreement. If employment is established, then both parties must observe the statutory rights and duties arising from it.

Legal Aspects of Construction Business Contractors’ rights will vary depending on whether they are classed as an independent business or a worker/employee. If their engagement is based on the satisfaction of a single project, or specific projects and for one project only, then contractor status is more likely than not to be found by the courts.

This would be the case if he has control over his own work, works only for the contracting company, and is subject to its direction and control over his work. An employment contract can be expressed or implied. If there is an express contract of service created by the words used by the parties, this will generally be sufficient evidence to determine that relationship. It may also be implied from conduct, e.g., it is inferred that the contractor agrees to subject himself to the direction of his employer.

Health And Safety Policy

Contractors operating in construction projects are required to ensure that all employees are trained on matters of health and safety. It is the duty of every contractor to develop a health policy that should be adhered to by all workers, contractors, subcontractors, suppliers, etc. No one working under these rules will make any claim or file any complaint against any contractor. It is necessary for every contractor to make sure that this policy is displayed outside the offices of every contractor or sub-contractor.

Contract Law

Every construction project has its own contract law which should be known by contractors because it forms an important basis for the smooth progress of your construction projects. It will help to understand legalities and how they can be used for the benefit of everyone involved. Contract law is the body of rules which are applied by courts to resolve disputes between parties in a civil action.

A contract can be defined as an agreement between two or more persons to do or not to do a particular thing that is enforceable by law. The essence of a contract is an agreement, but the mere agreement does not always mean there is a legally enforceable contract. For a valid contract to exist, there must be an offer and an acceptance of that offer by definite terms.

In addition, the parties involved in the agreement should not be engaged in illegal activities or in something that is against public policy. A valid contract must have a lawful object and both parties involved must receive some benefit from the contract. Contract law is different throughout the world.

The United States has its own set of rules and regulations by which any construction company must abide before signing a contract with any client. The construction law in each state is also different and it varies from one jurisdiction to another.

Finally, it’s important for every construction company to know the basics of contract law. This includes knowing how contracts are formed, what can be included in a contract, and when they expire. Solid working knowledge of all these principles is necessary for any business with hopes of remaining competitive in today’s market.

Thank you for reading!


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