May 30, 2017
Author: Melissa Brumback
Organization: RAGSDALE LIGGETT
Author: Melissa Dewey Brumback is an AV-rated partner in the Raleigh, North Carolina law firm of Ragsdale Liggett, where she concentrates her practice on complex construction, commercial, and business litigation. For more information: https://constructionlawnc.com/contact-information/
Mistake #1 Not Treating The Contract Seriously
This mistake can be made in several ways—either by not having a written contract at all, not reviewing the contract terms, or allowing inconsistent provisions between the contract and your proposal.
The contract rules the parties. It is the blueprint, if you will, that says what you can be sued for, when you can sue the other party, and what your damages will be. If you do not have any written contract, the law presumes certain things that you may not want it to presume.
The most frequent way this mistake is made is in not having a written contract at all. Every project should have a written contract.
The second way this mistake is made is to sign the contract presented, without reading it or attempting to negotiate any of the terms. In this bad economy, you may think that you can not afford to make trouble. However, almost all owners are willing to negotiate, at least to some extent. If you run into an owner who will not budge even an inch on the contract when the parties are all working well together, it does not bode well for the relationship down the road. Some projects you are simply better off not getting.
Simply stated, you must have a written contract, and you must look at that contract before you sign it. Standard contracts (that is, those produced by the American Institute of Architects (AIA), the Engineers Joint Contract Documents Committee (EJCDC), or ConsensusDocs) are the norm for larger projects. There is some built in level of projection if you use one of these standard form contracts. Even so, however, you need to look at the contract closely, particularly those changes and modifications to the default terms. Standard terms can cause problems if they will not work for your project and circumstances.
If your contract is not a standard contract, which is very often typical of and appropriate for smaller projects, you must examine the proposed contract even more closely. Contracts drafted by one party can often be extremely one sided. You must carefully read the contract from top to bottom to make sure everything discussed is accounted for in the document.
Another way you can make the mistake of not taking the contract seriously is by not dealing with the inevitable discrepancies between your proposal and the contract. Undoubtedly, there are things that differ between the two. Most contracts have a provision that is called a “merger clause,” which means that all former agreements are gone. The legal fiction is that all agreements have been merged into the contract itself; in actuality it may mean you will lose key terms if they are not stated within the final, executed contract.
Thus, if your proposal has a limitation of liability clause, but the contract does not, the contract will prevail. You might think that, if the contract does not address an issue, but your proposal does, the proposal term can still apply. Unfortunately, you would be wrong. The merger clause typically makes any side or prior agreement null and void. This is another reason to treat the contract seriously, and to make any changes necessary so the contract reflects the important points of your proposal.
Mistake #1 Not Treating The Contract Seriously
Mistake #2 Allowing Unfair Or One-Sided Contract Terms To Persist
Mistake #3 Not Choosing The Proper Dispute Resolution Method
Mistake #4 Failing To Have Good Change Order and/or Failing to Have a Good Request for Information Processes
Mistake #5 Failing To Have A Quality Document Retention System
Mistake #6 Failing To Respond Properly To Claims Of Errors & Omission
Mistake #7 Failing To Involve Insurance Company & Lawyer At First Time Of Trouble