Paying a contractor might appear straightforward, but can actually be complex. While this issue is sometimes overlooked during contract negotiations, early attention and thoughtful drafting can help mitigate the risk of disruptive payment disputes.
Important items to watch:
Structure: There are many ways to break down payments, such as triggering milestones or “cost-plus” contracts. Each has pros and cons.
Contingency: Every project has unanticipated expenses. Parties should discuss and document what falls under that category.
General conditions: Contractors are entitled to reimbursement of their direct overhead costs, which may be best paid in a lump sum.
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