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Bid Terms and Conditions

by | Contracts, Legal Briefs

Bid terms and conditions are a set of terms being “offered” by an entity to another entity, and they can serve to protect the Contractor / Subcontractor in the event of default by the Owner / General Contractor (or other entity with which the Subcontractor has contracted). It is prudent for the Contractor / Subcontractor to include a set of terms and conditions with its bid because it can create a set of identifiable terms to which the parties agreed from the beginning of the work.

Specifically, when a Subcontractor, for example, submits a bid to a General Contractor, the Subcontractor is making an “offer” to do the work. If the General Contractor then gives the Subcontractor a “notice to proceed” letter, depending on the language in that letter, the General Contractor has “accepted” the Subcontractor’s “offer” or bid. This “offer” and “acceptance” creates a binding contract between the parties, and then if there becomes a problem in the early stages of the Project, before the General Contractor has provided the Subcontractor with a “proposed subcontract” and before the Subcontractor has reviewed and revised that “proposed subcontract,” the terms and conditions of the Subcontractor’s bid will govern.

Therefore, if the Subcontractor sends a set of “terms and conditions” with its bid, and if the General Contractor “accepts” this bid with a letter of intent or notice to proceed or other direction to begin work, the Subcontractor will be in a position that its terms and conditions will apply to any problems that arise.

Similarly, the same principles would apply in the General Contractor – Owner relationship or any other relationship within the Construction / Development hierarchy other than strictly vendor relationships.

Obviously, then, the Contractor / Subcontractor wants to include terms and conditions that are favorable, fair to its side, and covering potential issues that arise on site (change orders, payment, default, etc.). Palecek & Palecek PPLC has developed such terms and advises clients on the types of terms to include. Palecek & Palecek can advise your business on the use of such terms and conditions.

One should review these terms and conditions with legal counsel to determine the particulars for its business, but, generally speaking, these terms will be helpful for any construction business.