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Understanding the Fine Print
Webinar: Understanding the Fine Print - Part II

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Vol. 1, No. 4 - September 2015
Understanding the Fine Print
Understanding the Fine Print: Contract Clauses Contractors Must Know

Webinar: Understanding the Fine Print - Part II - Contract Clauses Contractors Must Know (and Revise)

Speakers: Philip E. Beck, Partner at Smith Currie & Hancock LLP; Ronald D. Ciotti, Partner at Hinckley, Allen & Snyder LLP; Carrie L. Ciliberto, Senior Director & Counsel, Contracts & Construction Law at Associated General Contractors of America

October 1, 2015 - 3:00pm to 4:30pm



Understanding the Fine Print - Part II - Contract Clauses Contractors Must Know (and Revise)

Understanding the Fine Print - Part I- Contract Clauses Contractors Must Know (and Revise)

Jordan F. Howard, ConsensusDocs LLC
, Sales and Program Coordinator

Most contract disputes are about the timing aspect, and not about the scope of the work. Contractors should pay close attention to the timing of work in a contract because when a project gets delayed it costs contractors more money, and the owner doesn’t receive any benefit. Subcontracts need to watch out for general contractors unilaterally changing the schedule without compensation. 

Substantial Completion

Don’t tie LEED certification to completion date. Green Building is now very popular. What does that mean? It is something many owners want, contractors want to say they can deliver. A lot of things if you do or don’t in order to get a LEED certificate. LEED certificates have very state-specific requirements. A contractor must define what the expectations are and who is responsible. ConsensusDocs 310 contract, an industry first, is good for use on projects with green building elements, particularly those seeking a third-party green building rating certification such as LEED.

It is wise to never tie substantial completion to LEED certification because you don’t know what kind of certification you will get. It can sometimes take years after the project to go through some of the determinations to determine. This delay can impact when a contractor or subcontractor gets paid.
Liquidated damages provisions

Some contractors won’t sign a contract with liquidated damages in it. This is a misunderstanding. The absence of a liquidated damages provisions really means you do not know your exposure to damage claims. Contractors should know the cost if their project is delayed by a week or month. Knowing this can determine the costs of project acceleration versus paying liquidated damages. Most contractors want a cap at some amount (reimbursement, fees, etc.). Liquidated damages, instead of actual damages, must be a reasonable estimate of cost. Liquidated damages need to be a reasonable approximation of what the owner’s damages in the event of delay.

CM Fees General Conditions

What is included and excluded in general conditions? These don’t have universal definitions. Parties to a contract have to define what is included. Many disputes whether a certain element of cost the contractor should absorb, is covered by general conditions costs, or if they absorb it like any other cost of work (computer support, accounting support, etc.) It is recommended that you spell out what type of fee is included in the general conditions. You must make sure everyone is on the same page. It is important to owners that a general contractor be transparent and upfront without hidden costs.


Right to Financial Information

Right to Financial is critical to general contractors. Before commencement of work, the contractor will receive evidence of sufficient contract financing. A contractor has the right to discuss with the owner how their financing is coming. Do not leave it general.  Unlike AIA, ConsensusDocs 200 allows the contractor at any point in time to inquire. Information may be more critical once project receives than before. ConsensusDocs provides that a contractor only needs a written request by contractor for evidence of contract financing they can receive it.  

 


 

The views expressed in this newsletter are not necessarily those of ConsensusDocs. Readers should not take or refrain from taking any action based on any information contained in this newsletter without first seeking legal advice.

 

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