Today’s video is Bet Ya Didn’t Know Construction Contractors Are Doing This. You can watch it here or continue with this quick read.
Today we’re talking about
- The dispute clause in the contract
- Applicable law
If you’re in the US there are 50 different states with 50 different laws.
In Australia, you have different states and they also have a lot of different laws.
This makes contracts very complicated.
So one of the first things to look at in your contract is the section that goes through applicable law.
This is particularly noteworthy if you’re working with a company that has its headquarters in a different state.
i.e. WHICH LAW APPLIES?!
Before starting you need to know WHERE A DISPUTE WILL GET RESOLVED.
I.e. Which jurisdiction?
NEXT… the dispute clause
PROBLEM #1 If there’s a dispute, it will be resolved in a different state.
PROBLEM #2 The dispute resolution is going to be arbitration.
Resolving a dispute in a different state is going to cost you a whack of money.
More often than not arbitration is 100K before you even start.
What these 2 problems mean is that if you have a dispute you’re going to probably fold before you even begin because the client has forced these dispute costs on you.
Disputes are already expensive without having to travel to a different state or go through arbitration.
Clients put these clauses in contracts on purpose.
It’s a strategy for them.
Be careful of these clauses because
- They’ll hurt your bottom line
- They’ll hurt your cash flow
- They’ll derail the project
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SO MAKE SURE YOU CHECK THESE CLAUSES BEFORE SIGNING ANYTHING. PLUS YOU MIGHT WANT TO ADD YOUR OWN “INTEREST ON LATE PAYMENTS” CLAUSE.
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