Transcript Legal Issues in Construction Contracting

Legal Issues in Construction
Contracting
Saul C. Glazer
Madison, Wisconsin
October 1, 2010
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Contractual Risk Allocation
•Construction process is risk prone
•Risk should be assigned to the party best able to
manage or bear the risk
•Contracts are a tool for allocating/assigning risk
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Role of Contracts
•Source of Rights, Responsibilities and Procedures
•Tool for Assigning Risk
•Planning Tool
•Handbook for Performance
•Dispute Resolution and Prevention Tool
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Standard Form Contracts:
Disadvantages
•Lengthy, cumbersome
•Not tailored to local law
•Owner-specific regs
•Modification can create inconsistency
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Considerations in Using Standard
Forms
•Know their content
•Tailor for specific projects
•Understand that a change in one may require
change in another
•Legal review recommended
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Standard Form Contracts
•AIA
•AGC
•COAA
•DBIA
•EJCDC
•Public
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Scope of Work
•Constructible design
•Integrated construction documents
•Defined by plans and specs
•Also defined by GCs and SCs
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Changes
•Changes in Scope
•Delays
•DSCs
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Changes: Key Issues
•Allocation of risk of uncertainties
•Change Process
•Claims Process
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Delays
•Excusable delays – time
•Compensable delays -- $
–Owner responsibility
–Disruption/acceleration
–DSCs
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DSCs
•Type I – Physical conditions at site materially
different than indicated in contract documents
•Type II – Physical conditions at site unusual or differ
materially from those normally encountered or
expected
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DSC Requirements
•Prompt notice by contractor
•Prompt response by owner/A-E
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Limiting DSCs
•Site Investigation clause
•Disclaimers on data
•Full disclosure
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Insurance
•General liability
•Property/Casualty
•Professional liability
•Builder’s Risk
•Special endorsements (e.g., environmental)
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Surety Bonds
•Required on public work
•Performance Bond
•Payment Bonds
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Warranties
•Express
•Implied
•General
•Compare to correction obligation
•Design warranty by Design/Builder
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Indemnification
•Purpose
•Mechanics
•Limitations
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Limitation of Liability
•$ Limits
•Waiver of damages
•Covenants not to sue
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Dispute Resolution
•Claims Process
•Mediation
•Arbitration
•Litigation
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Risk Management Practices
•Quality Contracts
•Follow contract procedures
•Respect means and methods
•Communications
•Documentation
•Timeliness
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