Understanding Key Construction Contract Provisions ATTORNEYS AND COUNSELORS AT LAW 1

Transcription

1 Understanding Key Construction Contract Provisions THOMAS O. WILLIAMS, Esquire March 16, 2012 ATTORNEYS AND COUNSELORS AT LAW 1

2 COPYRIGHT MATERIALS This educational activity is protected by U.S. and Internationalcopyright laws. Reproduction, distribution, display and use of the educational activity without written permission of the presenter is prohibited. REAGER & ADLER, PC

3 LEARNING OBJECTIVES At the end of this presentation you will be able to: Understand contract requirements Choose the appropriate form of contract for construction purposes Identify differences between AIA families of contract documents Assess Claim Provisions, Indemnification, Dispute Resolution and Defaults 3

4 Contract trequirements Exchange of Consideration Meeting of the Minds 4

5 Risk Shifting Devices 5

6 Various Forms of Contracts for Construction 6

7 AIA DOCUMENTS Families of Contract Documents AIA documents are divided into eight different families of documents, depending on project type and/or delivery method. Each family encompasses individual documents from different series that are applicable to that specific project type or delivery method.

8 Eight Families of Contract t Documents Conventional (A201) Family Construction Manager as Advisor (Cma) Family Construction Manager as Constructor (CMc) Family Design-Build Family 8

9 Eight Families of Contract t Documents Integrated Project Delivery (IPD) Family Interiors Family International Family Small Projects Family 9

10 Example: CONVENTIONAL (A201) FAMILY Project type: separate contracts for design/construction Delivery method: Design Bid Build Small to large projects Includes documents from A, B, and C series 10

11 Series of Contract Documents AIA further divides its contract documents into different series based upon the specific purpose of the documents. 11

12 Six Series of Contract Documents A Series: Owner/Contractor t Agreements B Series: Owner/Architect Agreements C Series: Other Agreements 12

13 Six Series of Contract t Documents D Series: Miscellaneous Documents E Series: Exhibits G Series: Contract Administration and Project Management Forms 13

14 A-Series Documents: OWNER AND BUILDER Most A-Series documents designed to be used in pairs A101 + A201 used for full scale projects, multiple trades A401 + A201 integrates subcontractors into project 14

15 Understanding Typical Contract Provisions 15

16 Money Time Both Changes and Change Orders A201 Article 7 (lengthy section) Change Order = Agreement That work is extra (out of scope); and 2. Will take x additional time and x $$$. 16

17 Change Directive Where no Agreement reached 4 approaches 1. Mutual acceptance of lump sum properly itemized. 2. Unit prices as set forth in Contract, or later agreed upon (think Rock) 3. Cost to be determined by mutually agreed upon method 4. Architect t determination ti **Note: Parties must continue to perform 17

18 Understanding Claim Provisions

19 Definition of a Claim A201 Article Demand or assertion by one of the parties Seeking payment of money, or Other relief with respect to the terms of contract Includes other disputes/matters in question Party bringing claim must substantiate the claim 19

20 Notice of Claims A 201 Article Claims must be initiated by written notice To other party and IDM*, with copy to architect t Claims must be initiated within 21 days After event giving rise to claim, or After condition first recognized by claimant * Initial Decision Maker may be architect or other selected person 20

21 Claim Provisions Article Claims for Additional Cost Notice must be given prior to proceeding with work Article Claims for Additional Time Must include estimate of cost or effect of delay 21

22 Claim Process Article Give written Notice of Claim Article Claims referred to IDM for initial decision Initial decision prerequisite to mediation, dispute res. Unless no initial decision within 30 days Article Can file for mediation any time after I.D. 22

23 ARTICLE IDM Will... Request additional information or response Reject Claim in whole or in part Approve the Claim Suggest a compromise Advise lack of information or not appropriate to decide 23

24 DISPUTE RESOLUTION AIA Documents Mediation Arbitration Litigation A101 and B

25 Indemnification (Section 3.18) Shifting the Risk - An agreement by which one party is obligated to secure another party (parties) against an anticipated loss. - A shift of liability from one person held legally liable to another person. 25

26 Indemnification Indemnity or indemnification can be sought through common law equitable principles(legal pursuit of an actual bad actor) or by way of a contract. 26

27 Payment and/or Performance Bonds (Section 11.4) Suretyship An agreement by one to answer for the liability of another Surety steps into the shoes of the initial promisor Are surety bonds required or provided d on the Project? Insurance vs. Surety 27

28 Insurances (Article 11) What levels? Confirmation Cancellation Notice Additional Insured 28

29 Waiver of Subrogation (Section ) Subrogation Definition - Substitution of one person in the place of another concerning a lawful claim - What is being waived? - Why is it waived? - Who ocan waive it? 29

30 Joint Checks Authorized A201 Article 9 If Architect withholds certification because contractor fails to pay subs and/or suppliers Owner may issue joint checks Owner Always has the right to request written evidence of payment 30

31 Right to Withhold Payment (Section 9.5) - Defective work - Third party claims - Failure of contractor to pay subs/suppliers - Evidence work cannot be completed for unpaid balance - Damage to owner or separate contractor - Repeated failure to carry out work 31

32 Pay WHEN Pid Paid v. Pay IF Paid 32

33 Concept of Flow Down 33

34 Choice of Law, Jurisdiction and Venue Have you litigated a dispute in Alaska or Mexico before? Controlling your dispute resolution 34

35 Default eaut What constitutes a default? Opportunity to Cure (Section 2.4) Remedies 35

36 TERMINATION (Article 14, A201) Termination by Contractor Failure of Payment (Section 9.7) Termination By Owner For Default For Convenience 36