{"id":906033,"date":"2026-08-20T16:30:59","date_gmt":"2026-08-20T22:30:59","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=906033"},"modified":"2026-08-20T16:31:06","modified_gmt":"2026-08-20T22:31:06","slug":"construction-contract-killer-clauses-minimizing-risk","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-killer-clauses-minimizing-risk\/","title":{"rendered":"Killer Contract Clauses: Minimizing Risk in Construction Contracts"},"content":{"rendered":"\n

Michael Carroll | Kerr Russell<\/a><\/p>\n\n\n\n

When I give speeches about construction contracts, I often have subcontractors and other lower-tier construction project participants in the audience. More than once, I have heard such a party lament: \u201cWhat\u2019s the point of requesting new and different language from the upstream party \u2500 they never agree to make my changes anyways?\u201d<\/p>\n\n\n\n

To which I respond: \u201cYou must at least try.\u201d That\u2019s because there are certain clauses, most notably the indemnification clause, which have become almost standard in the industry but which are extremely unfair. And in certain circumstances, such a clause could end up being a threat to the very existence of the company.<\/p>\n\n\n\n

Gathered below are my takes on the five most important clauses to address in a construction contract<\/a> between a lower-tier entity like a subcontractor and its upstream counterpart, e.g. the general contractor. I have also supplied some tips to use in negotiating such contracts.<\/p>\n\n\n\n

No-Damage-for-Delay<\/strong><\/p>\n\n\n\n

Subcontracts often contain a clause that indicates that a subcontractor\u2019s sole remedy in the event of a delay will be a time extension, and that under no circumstances shall they receive monetary damages for any delay on the project. My subcontractor clients have had some success requesting that the general contractor add a caveat to such a clause, indicating that if the general contractor itself<\/em> is able to collect some monetary relief, then it will share such money with the downstream subcontractor.<\/p>\n\n\n\n

Waiver of Consequential Damages<\/strong><\/p>\n\n\n\n

Consequential damages, by their nature, are more attenuated than direct damages that flow from a breach of contract. They might encompass things like alleged lost business opportunities on other projects, or increased lending or bonding costs. It is not unfair for parties to ask each other to waive their right to consequential damages. The problem arises when such waiver is couched as a unilateral<\/em> waiver of consequential damages by the subcontractor to the upstream party. The simple tip in this instance is to seek to make such waiver a mutual one, rather than unilateral.<\/p>\n\n\n\n

Force Majeure<\/strong><\/p>\n\n\n\n

Force majeure clauses are meant to protect a contracting party if something totally unforeseen should arise, like an act of God, a war, etc. These clauses received a lot of attention in the wake of the COVID pandemic, as parties began to include words like \u201cpandemic\u201d and \u201cepidemic\u201d in the list of things that qualify for force majeure relief. The drafting tip for this type of clause is to try adding protection against additional unforeseen causes \u201cbeyond the reasonable control of the subcontractor.\u201d<\/p>\n\n\n\n

Limitation of Liability<\/strong><\/p>\n\n\n\n

More and more often on construction projects, parties are seeking to cap or otherwise limit their liability. An example of such a clause you might seek in your contract to achieve such an end is as follows:<\/p>\n\n\n\n

Notwithstanding anything to the contrary contained herein, the liability of either party for any damages shall be limited to the Price stated in the Purchase Order.<\/p>\n\n\n\n

Indemnification<\/strong><\/p>\n\n\n\n

The indemnity clause in a party\u2019s construction contract may pose the most risk of any of them. Increasingly, upstream parties are including indemnification language that seeks to hold the downstream vendor responsible for any manner of different events that may occur, irrespective of how much the subcontractor was actually at fault. The key tip with regard to these clauses is to seek to inject the concept of \u201cproportionality\u201d by limiting claims against the subcontractor to only \u201cthe extent caused by\u201d the negligence of subcontractor.<\/strong><\/p>\n\n\n\n

Negotiating construction contract clauses is an opportunity to better allocate risk, protect your interests, and reduce the likelihood of costly disputes down the road. Even if every proposed revision is not accepted, raising these issues can lead to meaningful improvements in your contract terms.<\/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 801.641.8304, or email experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Michael Carroll | Kerr Russell When I give speeches about construction contracts, I often have subcontractors and other lower-tier construction project participants in the audience. More than once, I have heard such a party lament: \u201cWhat\u2019s the point of requesting new and different language from the upstream party \u2500 they never agree to make my… Continue reading Killer Contract Clauses: Minimizing Risk in Construction Contracts<\/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-906033","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-construction-contract","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nKiller Contract Clauses: Minimizing Risk in Construction Contracts - 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