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Construction Contracts

contract, parties, business, understanding, verbal, agreement and written

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CONSTRUCTION CONTRACTS As the result of a great many centuries of experience, it has been found of advantage to do a very large percentage of the total busi ness of the world by the contract method. In its essentials this method consists of an agree ment embodying the amount of the compensa tion to be paid, on the one hand, and the amount and quality of the performance, on the other. In the simplest forms of business, where there is a cash transaction to be carried out, a man can buy a horse or a suit of clothes, the trans action taking place by delivery, without what we are here considering as a formal contract; but, even in its simplest cases, there must be an understanding before the parties actually do business, and this understanding constitutes a contract.

When a man employs a carpenter to work for $3.00 a day, the arrangement—whether verbal or written—under which the carpenter goes to work, usually means that he is to comply with the instructions of his employer as to what work he is to do and how he is to do it, in con sideration of which he receives $3.00 per day; and the employer is under obligation to pay the $3.00, and to confine the nature of his instruc tions and requirements to the limits of the usual practice in his neighborhood and in the particu lar trade to which the man belongs. This is a contract in which the $3.00 per day is a stipu lated feature. The implied features are one of the great troubles—and necessary troubles—in the economic administration of business of this kind, because, as a general thing, the parties in interest never have exactly the same idea of what the implied features are; and, moreover, it is frequently the case that the clauses in a written contract, as well as the intentions of the parties, are subject to differences in the interpretations that may be given them by different people.

There are two principal ways of looking upon a contract; it may be considered as a legal in strument pure and simple; or it may be con sidered as a business arrangement, entered into for the purpose of making money, by two or more parties, for their mutual financial benefit, but never for the exclusive benefit of either party, since the fundamental basis of the admin istration of business law is that a man shall not be obliged to enter into an agreement unless he considers it to his interest to do so. A con

tract cannot be properly considered under either of these points of view without taking into con sideration the manner in which it must neces sarily be affected by the other. In this discus sion, the consideration of the contract as a business arrangement is made the fundamental one, and its legal status has been discussed only So far as it affects the practice in an economic sense.

Contract Defined.

A construction contract is an agreement between parties to pay a cer tain compensation for certain valuable posses sions or services, and may be for labor, material, money, or any valuable consideration. may be in writing or simply a verbal understanding; but so long as it is an arrangement between the parties interested, and is understood by both or all of them to be such, it is a contract, and they are both or all equally bound by it.

Often it happens, in the case of written as well as verbal contracts, that, after unforeseen conditions have developed, the understanding of the parties may differ as to the meaning of certain clauses—their scope and the original intent when the contract was made. Further more, when a dispute arises, it may appear that when the contract was originally prepared the contractor had an entirely different idea from that held by the owner, as to what lie (the con tractor) was expected to do. In such ease, un less it can be clearly shown that one of the parties was guilty of fraud—a criminal matter —the contract is sound and binding, and the meaning of the disputed clause is taken to be what its language would imply to an intelligent and unprejudiced third person. This third per son may be a witness to a verbal agreement, or he may be one to whom a written contract is afterward submitted. Therefore, although the parties must both or all understand that they have an agreement in order that the contract shall be valid, yet one of the parties cannot abro gate it with impunity by claiming or proving that he has misunderstood the meaning of a part of it.

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