I. The Construction Contract

A written contract is essential for any construction job. However, many in the industry feel secure because they have operated for several years without a dispute. Yet, contracts are like insurance in many ways; they provide help, guidance, and assurance when disputes do arise. Within certain limitations, the law will enforce contracts created between competent people. The State Supreme Court has said that “Alabama law firmly embraces the concept of freedom of contract. Contracts between competent parties, voluntarily and fairly made, are valid and enforceable.” Berkel and Co. Contractors, Inc. v. Providence Hosp., 454 So.2d 496, 505 (Ala. 1984). Further, “Alabama has a strong public policy favoring the enforcement of contractual provisions entered into by competent parties.” Diamond Talent, Inc. v. Smith, 653 So.2d 290, 292 (Ala. 1995) (J. Maddox dissenting) (citing Puckett, Taul & Underwood, Inc. v. Schreiber Corp., 551 So.2d 979, 983 (Ala.1989)). Regarding sales, a contract “merges all prior negotiations and all prior oral understandings into the written contract between the parties.” Puckett, Taul & Underwood, Inc. v. Schreiber Corp., Inc., 551 So.2d 979, 983 (Ala. 1989). Therefore, if a dispute arises, a contract gives the parties and the court a picture of the agreement that existed. The courts will, therefore, generally enforce contracts between those in the construction industry.

When entering into a contract, it is imperative that you read and understand what you sign. Parties to a construction contract often attempt to avoid the enforcement of contract terms by claiming that they were not aware of the specific term or that a certain part of the contract is unfair. However, the law is clear in Alabama that “a person who signs a contract document is on notice of the terms therein and is bound thereby, even if he or she fails to read the document.” Safeway Ins. Co. of Alabama, Inc. v. Taylor, No.1980048, 1999 WL 1046556, *3 (Ala. 1999); see also, Locklear Dodge City, Inc. v. Kimbrell, 703 So.2d 303, 306 (Ala. 1997) (“a person who signs a contract is on notice of the terms therein and is bound thereby even if he or she fails to read the document.”);Vance v. Huff, 568 So.2d 745, 751-52 (Ala. 1990) (“In civil contractual matters, the law always has been that one is presumed to know and intend what he places his signature to.”). The duty to read what you sign exists in construction law as well. Regarding construction contracts, the Alabama Supreme Court has stated that “[w]here one by his contract undertakes an obligation which is absolute, he is bound to perform within the terms of the contract or answer in damages, despite an act of God, unexpected difficulty, or hardship, because these contingencies could have been provided against by his contract.” Alpine Const. Co. v. Water Works Bd. of City of Birmingham, 377 So.2d 954, 956 (Ala. 1979) Before you sign a contract, be sure you read and understand everything you will put your name to. With very few exceptions, you will be bound to it later.

An agreed upon construction contract can allow for the parties, early on, to work through issues that may be faced on the construction project. This can help to alleviate or lessen lengthy disputes involving construction claims, bond claims, lien claims and protracted litigation where the parties seek to work out their disputes.