Every contract divides the risks
and benefits of a transaction
between the two parties. The trick
to a fair contract is finding a way to
divide both risks and benefits
evenly. Some building and remodeling
contracts come closer to this
ideal than others.
The lump sum contract, for
instance, in which the contractor
agrees to do the job for a given
price, places all of the risk on the
contractor. It is the contractor who
takes the hit if costs or schedules
get out of whack, even if factors
are beyond his or her control.
The most common alternative
to the lump sum contract is the
time-and-materials contract, also
called the cost-plus contract, since
it includes charges for time and
materials,