Frequently contracts for construction work are a combination of several written components:
- a signed owner-contractor agreement;
- general conditions (frequently utilizing American Institute of Architects printed forms)
- supplementary general conditions (usually prepared by either the owner or project architect); and
- the detailed plans and specifications for the project.
The owner-contractor agreement should clearly identify the other con tract documents by date and other distinguishing characteristics so that later confusion will be avoided. The general and supplementary general conditions are key components of the contract documents. Unfortunately, they are frequently overlooked in the bidding and negotiation process by contractors anxious to address other issues-such as preparing a successful bid and getting the job. My recent review of a proposed construction contract for a contractor client convinced me of the importance of a careful study of proposed contract documents-before the contractor signs. The supplementary general conditions submitted by the owner were outrageous!
The owner-contractor agreement itself was on the American Institute of Architects (AIA) form for a lump sum contract. That document prompted no particular concern. The contract documents also included the AIA ~ Document A201 - 1976 General Conditions. Those general conditions are generally well-balanced between the owner and contractor and the frequency of their use in the industry and resulting court interpretations makes their use desirable.
However, the proposed supplementary general conditions I reviewed emasculated every protection given to the general contractor under the AIA General Conditions. For example, they took away the general contractor's mechanic's lien rights, they deleted provisions designed to assure that the owner had sufficient funds to pay the general contractor and they even denied the general contractor an opportunity to stop work for any reason-even non-payment.
Also, the owner's proposed supplementary general condition imposed the risk of concealed conditions on the general contractor and attempted to prevent the general contractor from recovering damages if he was delayed - even by the owner. Other provisions of the supplementary general conditions were similarly anti-contractor.
While that particular set of supplementary general conditions may have been extreme, similar examples of this type of contract favoritism are common. It is therefore important that when bidding or negotiating contracts, contractors should be alert to the contract documents which will later govern their rights as well as their obligations.
Merely obtaining good prices from subcontractors and suppliers, completing accurate take-offs and estimates and succeeding in getting the contract or award is not sufficient. Every advantage gained may be wiped out by contract terms which are unfair or burdensome to the contractor.
READ THE ENTIRE CONTRACT AND ALL OF THE CONTRACT READ THE WHOLE DOCUMENTS-BEFORE YOU BID OR SIGN. CONTRACT