You probably thought you would never see the finish line to this series of posts on the Top 20 contract issues for contractors and subcontractors. Well, here we are, at the finish line.
In this final part of the four-part series, I share the last few areas of concern for contractors and subcontractors when reviewing a construction contract. These include:
- Assignment: Make sure that the Owner does not have the unilateral right to assign the contract without the prior written consent of Contractor. Also, try to negotiate your right to assign the contract if necessary.
- Lien Waivers and Indemnification: Make sure that any obligation to indemnify, defend or otherwise protect the Owner from liens is expressly conditional upon the Owner’s timely payment of sums when due. Also, make sure that you are not prospectively waiving your rights to file a lien in the first place. In many states, these types of lien waivers are invalid and unenforeceable as a matter of law. These laws provide you protection and should be cited when negotiating with the other side.
- Indemnification: Ensure that you are not indemnifying the Owner for its own negligence, and that the indemnification clause covers only "personal injury" or "damage to property other than the work itself” that is caused by you or your employees.
- Liquidated Damages and Time: When liquidated damages are included in the contract, make sure that there are no unreasonable restrictions on Contractor’s ability to obtain a time extension.
- Governing Law and Forum Selection Clause: Finally, make sure you double-check these provisions. In most cases, the Owner-Contractor agreement calls for the governing law to be the place of the project and that litigation/arbitration will occur in that same locale. While this is the general rule, there may be an advantage to agreeing to another jurisdiction.
While I could write this series for a couple more weeks, I am not going to let all the secrets out. What recommendations did I miss?