Business Management and Contract Law
Contracts
A contract needs offer, acceptance, and consideration. The statute of frauds requires writing for agreements not performable within one year and for land-related transactions. In Arizona, A.R.S. § 32-1159 voids construction indemnity clauses to the extent they shift a party's own negligence onto another party, so a broad "indemnify for all claims" clause is unenforceable in that respect. Every change should be a written change order stating price and time impact; unwritten "we'll work it out" promises are the classic dispute seed.
Money and security
The prompt payment statutes (A.R.S. § 32-1129 series) set payment timelines down the chain and cap retainage; a contractor who is not paid must give statutory notice before suspending work. Lien rights are unforgiving: subcontractors and suppliers generally must serve a 20-day preliminary notice after first furnishing labor or materials to preserve full lien rights, and a lien must be recorded within the statutory window measured from last furnishing. Public work carries no lien - a Little Miller Act payment bond protects claimants instead.
Traps
- Treating a signed proposal as a complete contract when it omits scope, schedule, or payment terms.
- Missing the preliminary notice deadline and later finding the lien limited.
- Confusing performance bonds (protect the owner) with payment bonds (protect subs and suppliers).
- Assuming a "no-damage-for-delay" clause is always enforceable.
Worked example: a $200,000 progress payment with 10% retainage withholds $20,000, so the contractor nets $180,000; retainage flows down the chain and release is tied to the statutory trigger, not the owner's convenience.