{"id":100448,"date":"2018-01-02T04:06:35","date_gmt":"2018-01-02T09:06:35","guid":{"rendered":"https:\/\/sjcivil.com\/?p=100448"},"modified":"2024-03-28T02:42:21","modified_gmt":"2024-03-28T06:42:21","slug":"construction-contract-review-basics","status":"publish","type":"post","link":"https:\/\/sjcivil.com\/construction-contract-review-basics\/","title":{"rendered":"Construction Contract Review Basics"},"content":{"rendered":"<p><strong>Executive Summary:\u00a0 <\/strong>Each day we hand contracts down to our subs or we are signing contracts down from Owners or General Contractors.\u00a0 Know some of the basics of what to look for here.<\/p>\n<p><iframe loading=\"lazy\" style=\"border-radius: 12px;\" src=\"https:\/\/open.spotify.com\/embed\/episode\/2rUv49sKPEiKlT3vVzLi09?utm_source=generator\" width=\"100%\" height=\"152\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p><strong>What is and when will I ever use a Contract?<\/strong>\u00a0 A contract is a laying out of the \u201cRules of the Game\u201d. The Contract has all the rules that you and your partner (be it an Owner, General Contractor, subcontractor, or supplier) will follow as the job progresses. A contract has scope, payment terms, insurance, and notification requirements, and of course a reference to applicable plans and specifications. <strong>When will I ever use a Contract?<\/strong>\u00a0 In the first sixty seconds of meeting with your attorney, he or she will be asking for the Contract you signed.\u00a0 It will be a constant reference during the ensuing dispute. Before you sign, review these items below.\u00a0\u00a0<em>Issuing<\/em>\u00a0a contract is something that should be relatively easy \u2013 you hopefully had your attorney review your basic contracts, and each time you do work, you send the document to your sub or supplier.\u00a0 That\u2019s easy. In\u00a0<em>signing<\/em>\u00a0a contract handed down to you, look for these items:<\/p>\n<p><strong><a href=\"https:\/\/sjcivil.com\/wp-content\/uploads\/2018\/01\/CCRB.pdf\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-101006 size-medium\" src=\"https:\/\/sjcivil.com\/wp-content\/uploads\/2018\/01\/1280px-Amazon_Web_Services_Logo.svg-300x180.png\" alt=\"\" width=\"300\" height=\"180\" \/><\/a><\/strong><\/p>\n<ol>\n<li><u>No damages for delay<\/u>\u00a0\u2013 this is a terrible clause in which you are paid only in time extension but not in money you spent to hang around during a delay (see my earlier article \u2013 scan the QR). If you cannot strike this paragraph, consider rewording it.<\/li>\n<li><u>Pay \u201cif\u201d paid<\/u>\u00a0\u2013 where a GC is looking for Pay\u00a0<strong><u>if<\/u><\/strong>\u00a0paid, it is better to use Pay\u00a0<strong><u>when<\/u><\/strong>\u00a0(I have language if you are interested).<\/li>\n<li><u>Retaining your equipment<\/u>\u00a0\u2013 many contracts state that the GC can keep your equipment on the job to finish your work if you leave or are removed. With specialty contractors, this can be a killer since only your specialized equipment can accomplish the scope you service.<\/li>\n<li><u>Differing Site Conditions (DSC)<\/u>\u00a0\u2013 if you run into an underground obstruction not shown in the documents, the best way to receive time and cost reimbursement is via this standard clause. Make sure your contract has this clause or account for this risk via contingency.<\/li>\n<li><u>Human remains or hazardous materials<\/u>\u00a0\u2013 check to see if you are protected from time and cost impacts resulting from this extra work. Often times contracts are silent or include a\u00a0<em>no damages for delay<\/em>\u00a0clause which does not compensate you for your standby costs.<\/li>\n<li><u>Order of precedence of documents<\/u>\u00a0\u2013 many jobs have conflicts within their documents (conflicting details in the drawings and\/or conflicting language between the drawings and the specifications). Seek out the order of precedence of the documents (specific language usually trumps general language, specifications generally override the drawings, and higher quality is generally required over lesser quality products).<\/li>\n<li><u>Work hours<\/u>\u00a0\u2013 you may have stated on your proposal that you include only straight time work. Check the contract, it may say you have to accelerate (i.e., pay overtime) on your own nickel.<\/li>\n<li><u>Markup on extra work<\/u>\u00a0\u2013 does the contract allow markup on additional scope or must you perform it at cost?<\/li>\n<li><u>Liquidated damages (LDs)<\/u>\u00a0\u2013 are there any? By working day, calendar day, minute?\u00a0 Based on substantial completion or final completion?<\/li>\n<li><u>Job duration<\/u>\u00a0\u2013 job required to finish by a calendar date or within a certain number of days? Calendar days or work days? What are the holidays?<\/li>\n<li><u>Weather<\/u>\u00a0\u2013if it rains and you cannot move dirt, do you get a \u201ccredit\u201d for this day (i.e., get a time extension)?<\/li>\n<li><u>Inspector overtime costs\u00a0<\/u>\u2013 if you plan on working overtime, is the inspection cost by the owner at no additional cost to you, or must you pay to have the inspector on the job watching you \u2013 and what is the hourly rate?<\/li>\n<li><u>Bond<\/u>\u00a0\u2013 often times the language says bond to be provided at the Owner\u2019s cost. Two things here should be verified: (a) whether or not a bond is required and (b) that it is spelled out that this shall be extra cost.<\/li>\n<\/ol>\n<p><strong>Attorney review.<\/strong>\u00a0 Although you may think you\u2019re great at contract review, your attorney is better.\u00a0 Consider passing every new contract by your attorney for suggested edits with your client. <strong>My Story.<\/strong>\u00a0 I\u2019ve seen contracts that say pay at or near 25 working days after receipt of payment (\u201cat or near\u201d, what does this mean?!), that have no markup on equipment, and that are pay\u00a0<u>if<\/u>\u00a0paid.\u00a0 And I\u2019m not saying I negotiated all of these things away. A contractor is always one job away from going under \u2013 take whatever steps you can to tip the legal scales in your favor at contract signing. And the bonus item for today \u2013 don\u2019t think that the other party \u201clikes you and will take care of you\u201d.\u00a0 Once it gets to their lawyer, the Contract is all that matters and he\/she will do their best to skin you alive.\u00a0 And lose no sleep over it.<\/p>\n<span class=\"et_bloom_bottom_trigger\"><\/span>","protected":false},"excerpt":{"rendered":"<p>Executive Summary:\u00a0 Each day we hand contracts down to our subs or we are signing contracts down from Owners or General Contractors.\u00a0 Know some of the basics of what to look for here. What is and when will I ever use a Contract?\u00a0 A contract is a laying out of the \u201cRules of the Game\u201d. [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":104551,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","iawp_total_views":0,"footnotes":""},"categories":[131,50,40,38],"tags":[271,272,71],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Construction Contract Review Basics<\/title>\n<meta name=\"description\" content=\"Each day we hand contracts down to our subs or we are signing contracts down from Owners or General Contractors.\u00a0 Know some of the basics\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/sjcivil.com\/construction-contract-review-basics\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" 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