As the college football seasons comes to an end, USA Today had a special report on the salaries of coaches, as well as a great article on coaches’ contracts.  The article described how some schools have the freedom to include "unusual provisions" in their contracts. 


How’s that for bargaining?  Middle Tennessee State coach Rick Stockstill’s contract includes a provision that if he terminates his agreement without cause and signs with another Division 1 school, then MTSU can accept either a $200,000 payment from Stockstill or require his new school to enter a contract to play a game with MTSU.  Purdue’s coach Danny Hope was more concerned about his personal affects, as his contract allows him to keep personal items and records, including playbooks, notebooks and other documents, upon termination or expiration of his contract. 

Did you know that you can be equally creative with your construction contracts?  A contract is about defining transactions and relationships. It is a set of instructions that "instructs" the parties on how to perform in various circumstances.  Although the contract should have some standard "must-include" provisions, you can include special language to address any situation conceivable.  Here are some examples:

  • Consider a cost-savings bonus.  Many construction projects include a cost-plus price, which means the owner pays the contractor the cost of the work plus a fee for the contractor’s services.  In this instance, the parties may consider including a guaranteed maximum price.  To provide an incentive for the contractor to come in under budget, parties often include a cost-savings bonus where the parties split any savings. 
  • Consider an early completion bonus.  Many times you hear about liquidated damages and penalties assessed against the contractor for delays in completion of the work.  As an incentive to get the work completed before schedule, consider including an early incentive payment.  But be clear in your words, as one contractor recently had to litigate the issues of an early completion bonus because the owner would not pay.
  • Consider non-monetary compensation.  Just as football coaches are thinking outside the box on their contracts, parties to a construction contract (whether owner, contractor, subcontractor or supplier) can be creative with the compensation.  Perhaps this construction contract may be the basis of a supplier contract that includes other projects and bulk savings for materials.  Perhaps the owner wants to negotiate a shorter warranty period with unit prices for certain repair and maintenance items. 

There are few limits (…perhaps statutory prohibitions…) to what the parties can include in their construction contract.  Think outside the box.

Image: pobrecito33