{"id":900807,"date":"2023-02-01T15:13:07","date_gmt":"2023-02-01T22:13:07","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=900807"},"modified":"2023-02-01T15:13:15","modified_gmt":"2023-02-01T22:13:15","slug":"construction-contract-top-five-provisions","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/","title":{"rendered":"Top Five Provisions to Review in Your Construction Contract"},"content":{"rendered":"\n

John Hawkins | Porter Hedges<\/a><\/p>\n\n\n\n

It\u2019s 3:00 p.m. on a Friday and you\u2019ve been tasked with reviewing a construction contract<\/a> by close of business. It\u2019s long, and you only have time to review the most important terms. Which ones do you choose?<\/p>\n\n\n\n

Divide and Conquer<\/strong><\/p>\n\n\n\n

Contract terms can be divided into three general categories of terms. There are commercial terms like scope of work, price and schedule deadlines. There are procedural terms such as payments, change order requirements and notices for events like substantial completion. Presumably, the project team is addressing the commercial and procedural terms. This leaves the third category sometimes euphemistically called \u201cboilerplate.\u201d These are important too, of course, and this article gives a list of the top 5 most critical to review when time is short.<\/p>\n\n\n\n

A Top 5 List<\/strong><\/p>\n\n\n\n

1. Dispute Resolution<\/p>\n\n\n\n

These terms set the forum where a dispute will be decided, generally in litigation at the courthouse with a jury or arbitration decided by construction lawyers. Contractors usually prefer the latter because they want their case decided by arbitrators who understand what they do. If arbitration is chosen, make sure it allows for \u201cjoinder\u201d and \u201cconsolidation,\u201d which allows getting all the project stakeholders into one proceeding to avoid having one dispute in litigation and the other(s) in arbitration. Owners may want to join the designers, and contractors may want to join subs, so careful coordination of dispute resolution terms among the different stakeholder contracts is important with arbitration. Nothing is required in the contract for joinder in litigation. Arbitration used to be quicker and cheaper, but this isn\u2019t necessarily true today.<\/p>\n\n\n\n

2. Indemnity<\/p>\n\n\n\n

Whole books have been written on indemnity, but there are a couple of key concepts to consider. Most parties want to strike the obligation to \u201cdefend.\u201d The party you are defending and indemnifying will say this means providing a defense for them upfront like insurance. Some insurance policies won\u2019t pay for this. Also consider the scope of what you\u2019re indemnifying. Does the trigger for the indemnity obligation limit liability for losses \u201cto the extent caused by\u201d your alleged negligence, allowing lien claims, providing faulty owner information, etc.? Most states have statutes that limit the scope of some \u201cbroad form\u201d indemnities, those triggered by the acts or omissions of the party you\u2019re supposed to defend or indemnify, but it\u2019s better to address these issues in the contract.<\/p>\n\n\n\n

3. Consequences for Schedule Delays<\/p>\n\n\n\n

Contracts often have \u201cno damages for delay\u201d provisions. These generally say that the contractor can only get a schedule extension if it is delayed for reasons not its fault, but it cannot get extra money. These provisions are common and could saddle the contractor with, or help the owner avoid, large losses for a delay.<\/p>\n\n\n\n

Potential losses to the owner from delay are often hard to estimate when the parties sign the contract. The owner and contractor will sometimes agree on \u201cliquidated damages\u201d for contractor delay that\u2019s the contractor\u2019s fault. These are usually stated in dollars per day of delay in meeting critical deadlines such as substantial completion. The estimated, or \u201cliquidated,\u201d amount must be by its nature difficult to quantify and the parties\u2019 reasonable estimate of the loss at the time the contract is signed. The owner will need to have some rational basis for the liquidated amount, or it may be unenforceable as a penalty.<\/p>\n\n\n\n

4. Force Majeure<\/p>\n\n\n\n

A force majeure is another important concept, especially related to delays. It is an event that the parties could not have reasonably anticipated or controlled such as a major hurricane or \u201can Act of God.\u201d The concept is that the parties won\u2019t be held responsible for contract performance to the extent of the effect of the force majeure. Care should be taken in listing what constitutes a force majeure. Common new force majeure events sometimes listed are delay and disruption from supply chain issues and pandemics. Who will bear the risk of a delay from these and other force majeure events?<\/p>\n\n\n\n

5. Limitations on Damages<\/p>\n\n\n\n

A waiver of \u201cconsequential\u201d damages is a common term with far-reaching implications. If something is built wrong, the costs to fix the problem are \u201cactual\u201d or \u201cdirect\u201d damages. These are the costs directly and necessarily resulting from failing to meet contract requirements. This might be the cost to replace or repair a defective pump system. Consequential damages are caused by, but do not necessarily flow from, breaching the contract. These might include lost revenue and loss of use of the project. The cost to the owner for not being able to use the project because of faulty construction can be catastrophically high. Given the potential loss, owners usually don\u2019t want to waive consequential damages, and contractors usually do.<\/p>\n\n\n\n

Another increasingly common provision if a general limitation of the contractor\u2019s liability if it makes a mistake. The idea is that the contractor will limit its potential loss given the potential gain from the project. This is often stated as a dollar amount or percentage of the total contract price. The parties will have to weigh the risks of project problems that generate high-dollar damages.<\/p>\n\n\n\n

Conclusion<\/strong><\/p>\n\n\n\n

The \u201cboilerplate\u201d terms are important and need to be carefully reviewed as time and circumstances allow. This list of five provides a guide to some of the most important ones to review when time is short. These deserve special attention because of the potential loss \u2013 or protection \u2013 they can bring.<\/p>\n\n\n\n

\n\n\n\n

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

John Hawkins | Porter Hedges It\u2019s 3:00 p.m. on a Friday and you\u2019ve been tasked with reviewing a construction contract by close of business. It\u2019s long, and you only have time to review the most important terms. Which ones do you choose? Divide and Conquer Contract terms can be divided into three general categories of… Continue reading Top Five Provisions to Review in Your Construction Contract<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,224],"class_list":["post-900807","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-construction-contract","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nTop Five Provisions to Review in Your Construction Contract - Advise & Consult, Inc.<\/title>\n<meta name=\"description\" content=\"this article gives a list of the top 5 construction contract provisions most critical to review when time is short.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Top Five Provisions to Review in Your Construction Contract - Advise & Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"this article gives a list of the top 5 construction contract provisions most critical to review when time is short.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/\" \/>\n<meta property=\"og:site_name\" content=\"Advise & Consult, Inc.\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/\" \/>\n<meta property=\"article:published_time\" content=\"2023-02-01T22:13:07+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-02-01T22:13:15+00:00\" \/>\n<meta name=\"author\" content=\"admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@adviseconsult\" \/>\n<meta name=\"twitter:site\" content=\"@adviseconsult\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/\"},\"author\":{\"name\":\"admin\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7\"},\"headline\":\"Top Five Provisions to Review in Your Construction Contract\",\"datePublished\":\"2023-02-01T22:13:07+00:00\",\"dateModified\":\"2023-02-01T22:13:15+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/\"},\"wordCount\":954,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#organization\"},\"keywords\":[\"Advise & Consult\",\"Construction Contract\"],\"articleSection\":[\"Construction Contracts\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/\",\"name\":\"Top Five Provisions to Review in Your Construction Contract - Advise & Consult, Inc.\",\"isPartOf\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#website\"},\"datePublished\":\"2023-02-01T22:13:07+00:00\",\"dateModified\":\"2023-02-01T22:13:15+00:00\",\"description\":\"this article gives a list of the top 5 construction contract provisions most critical to review when time is short.\",\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/\"]}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#website\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/\",\"name\":\"Advise & Consult, Inc.\",\"description\":\"Construction Expert Witnesses\",\"publisher\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.myconstructionexpert.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#organization\",\"name\":\"Advise & Consult\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png\",\"contentUrl\":\"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png\",\"width\":162,\"height\":75,\"caption\":\"Advise & Consult\"},\"image\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/\",\"https:\/\/x.com\/adviseconsult\",\"https:\/\/www.linkedin.com\/company-beta\/204526\/\",\"https:\/\/www.youtube.com\/user\/MrConstructionExpert\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7\",\"name\":\"admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg\",\"caption\":\"admin\"},\"sameAs\":[\"http:\/\/www.expertwitnessinconstruction.com\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Top Five Provisions to Review in Your Construction Contract - Advise & Consult, Inc.","description":"this article gives a list of the top 5 construction contract provisions most critical to review when time is short.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/","og_locale":"en_US","og_type":"article","og_title":"Top Five Provisions to Review in Your Construction Contract - Advise & Consult, Inc.","og_description":"this article gives a list of the top 5 construction contract provisions most critical to review when time is short.","og_url":"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/","og_site_name":"Advise & Consult, Inc.","article_publisher":"https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/","article_published_time":"2023-02-01T22:13:07+00:00","article_modified_time":"2023-02-01T22:13:15+00:00","author":"admin","twitter_card":"summary_large_image","twitter_creator":"@adviseconsult","twitter_site":"@adviseconsult","twitter_misc":{"Written by":"admin","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/#article","isPartOf":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/"},"author":{"name":"admin","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7"},"headline":"Top Five Provisions to Review in Your Construction Contract","datePublished":"2023-02-01T22:13:07+00:00","dateModified":"2023-02-01T22:13:15+00:00","mainEntityOfPage":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/"},"wordCount":954,"commentCount":0,"publisher":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#organization"},"keywords":["Advise & Consult","Construction Contract"],"articleSection":["Construction Contracts"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/","url":"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/","name":"Top Five Provisions to Review in Your Construction Contract - Advise & Consult, Inc.","isPartOf":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#website"},"datePublished":"2023-02-01T22:13:07+00:00","dateModified":"2023-02-01T22:13:15+00:00","description":"this article gives a list of the top 5 construction contract provisions most critical to review when time is short.","inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-top-five-provisions\/"]}]},{"@type":"WebSite","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#website","url":"https:\/\/www.myconstructionexpert.com\/blog\/","name":"Advise & Consult, Inc.","description":"Construction Expert Witnesses","publisher":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.myconstructionexpert.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#organization","name":"Advise & Consult","url":"https:\/\/www.myconstructionexpert.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png","contentUrl":"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png","width":162,"height":75,"caption":"Advise & Consult"},"image":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/","https:\/\/x.com\/adviseconsult","https:\/\/www.linkedin.com\/company-beta\/204526\/","https:\/\/www.youtube.com\/user\/MrConstructionExpert"]},{"@type":"Person","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7","name":"admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg","caption":"admin"},"sameAs":["http:\/\/www.expertwitnessinconstruction.com"]}]}},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p2ztG6-3Ml9","jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts\/900807","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/comments?post=900807"}],"version-history":[{"count":1,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts\/900807\/revisions"}],"predecessor-version":[{"id":900808,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts\/900807\/revisions\/900808"}],"wp:attachment":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/media?parent=900807"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/categories?post=900807"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/tags?post=900807"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}