{"id":31463,"date":"2017-03-31T15:00:52","date_gmt":"2017-03-31T19:00:52","guid":{"rendered":"https:\/\/www.constructionspecifier.com\/?p=31463"},"modified":"2020-01-17T09:07:11","modified_gmt":"2020-01-17T14:07:11","slug":"avoiding-a-contractual-fatal-flaw","status":"publish","type":"post","link":"https:\/\/www.constructionspecifier.com\/avoiding-a-contractual-fatal-flaw\/","title":{"rendered":"Avoiding a contractual fatal flaw"},"content":{"rendered":"

\"\"SPECIFICATIONS<\/strong><\/span>
\n<\/span>By Kevin O’Beirne, PE, FCSI, CCS
\n<\/strong>You may perhaps be thinking: \u201cIsn\u2019t the title of this article a bit over-dramatic? I mean, \u2018what constitutes the construction contract documents\u2019 is about as basic and boring as it gets.\u201d However, this is an important topic that is rarely well-appreciated by owners and design professionals, and one few in the design community think much about. In fact, the people who most contemplate this question are probably contractors\u2019 attorneys.<\/p>\n

Owners and design professionals always hope not to have to deal with lawyers on their projects. The last thing owners and design professionals want is for contractors\u2019 barristers to pick through the construction contract documents trying to find loopholes to benefit their client. Imagine that on a project, your client (the owner) and you (the design professional) are engaged in an unpleasant claim with the contractor, who has already retained an attorney. The contractor\u2019s lawyer announces, \u201cThis claim is over. The provision on which you\u2019ve based your position\u2014that the matter in question was already part of my client\u2019s contractual work\u2014was never actually part of the contract at all, because that item was never part of the contract documents.\u201d You can probably feel your stomach drop at the thought.<\/p>\n

This is what is referred to as a \u2018fatal contractual flaw.\u2019<\/p>\n

What is a contract document?
\n<\/strong>Construction \u2018Contract Documents\u2019\u2014a term usually indicated in their associated contract using initial capital letters\u2014are the written documents defining the roles, responsibilities, and \u2018Work\u2019 (with another initial capital) under the construction contract. They are legally binding on the parties to the contract, usually the owner and contractor. If it is a contract document, the parties are bound by the obligations indicated therein.<\/p>\n

Therefore, knowing which of the particular documents constitute the contract documents is very important, and should be indicated at only one appropriate location in the construction contract. The listing of what comprises the contract documents should be complete, correct, unambiguous, and not subject to unintended interpretations. Further, documents that have nothing to do with the parties\u2019 obligations once the contract is signed and therefore in effect should not be contract documents.<\/p>\n

Where should this all-important listing be located? American Institute of Architects (AIA) A521\/Engineers Joint Contract Documents Committee (EJCDC) N-122, Uniform Location <\/em>of Subject Matter<\/em> (2012), jointly developed by the AIA and EJCDC with CSI\u2019s support, indicates that the preferred location is the owner-contractor agreement. The standard contract documents of the AIA and EJCDC follow suit\u2014see AIA A101-2007, Standard Form <\/em>of Agreement Between Owner and Contractor (Stipulated Sum)<\/em>, and EJCDC C-520 (2013), Agreement Between Owner and Contractor for Construction Contract (Stipulated Price)<\/em>.<\/p>\n

List it once, and once only
\n<\/strong>CSI\u2019s well-known contract-writing axiom, \u201cSay it once and in the right place,\u201d is particularly important here, because indicating a requirement at only one location reduces the potential for conflicting provisions. In other words, if one lists what constitutes the contract documents at two locations and the two differ, a court or arbitration board is likely to rule that the governing provision is the one least onerous to the contractor. This may result in an unhappy owner and a design professional who may not work for that owner again.<\/p>\n

Unfortunately, the enumeration of the contract documents is sometimes included multiple times in the construction contracts. One of this author\u2019s favorite things to look for when reviewing non-standard construction documents (i.e.<\/em> documents not written by an independent, non-profit organization such as the AIA or EJCDC) is to find each location where the contract documents are listed, as well as the inconsistencies between them. Most people would probably be surprised at how commonly such provisions are included in construction contracts, and how often they differ from other, similar provisions in the same contract.<\/p>\n

Even the AIA\u2019s 2007 documents do this, no less than in three different locations\u2014in AIA A101-2007 at Articles 1 and 9 (twice in the same document), and in AIA A201-2007, Standard General Conditions of the Contract for Construction<\/em>, at Section 1.1.1. Worse, there are differences between each of these.<\/p>\n

In contrast, starting with its 2002 edition and continuing through the current 2013 edition, EJCDC\u2019s Construction Series (C-series) Documents are better in this regard\u2014what constitutes the contract documents is listed only once, at EJCDC C-520\u2019s Article 9.<\/p>\n

EJCDC C-700 (2013), Standard General Conditions of the Construction Contract<\/em>, defines the term \u2018Contract Documents,\u2019 simply as: \u201cThose items so designated in the Agreement, and which together comprise the Contract.\u201d<\/p>\n

EJCDC\u2019s approach has thus reduced potential for conflicting interpretations of what comprises the contract documents.<\/p>\n

\"\"<\/a>
This table compares enumerations of the contract documents, as written in AIA A101-2007 and EJCDC C-520.
Information courtesy AIA and EJCDC<\/figcaption><\/figure>\n

What constitutes the contract documents?
\n<\/strong>AIA A101-2007 Article 9 and EJCDC C-520 (2013) Article 9 each offer listings defining the contract documents, as presented in Figure 1. A notable difference between the AIA\u2019s and EJCDC\u2019s standard enumerations of the contract documents is that the AIA\u2019s model language does not explicitly include performance and payment bonds as contract documents. However, there are also some common themes between the two. For instance, both the AIA and EJCDC offer specific indication of the exact extent of each contract document, including the number of pages for each, the individual specifications sections, and the extent of the drawings. Neither leaves what constitutes \u2018drawings\u2019 and \u2018specifications\u2019 unspecific.<\/p>\n

Further, neither includes documents comprising the bidding requirements, which typically apply only to the bidding or procurement process but are not applicable after the contract is fully signed by the parties and made effective. The exception to this is that EJCDC allows, via optional language, inclusion of the contractor\u2019s bid\u2014typically only the list of bid items with their associated pricing\u2014as an exhibit to the agreement for contracts that have numerous bid items. EJCDC includes such optional language primarily to reduce the potential for transcription errors when drafting the final owner-contractor agreement for signature. Contracts with numerous bid items are common in civil\/sitework, where there are often many unit price items.<\/p>\n

It is incumbent on the person preparing the final contract documents for signature, usually after the bids are opened and the contract is awarded, to carefully complete Article 9 of the owner-contractor agreement, and to ensure all required contract documents are properly and fully enumerated therein.<\/p>\n

Correspondingly, when the final contract documents are assembled for signature by the parties, they should not include extraneous documents such as the bidding requirements (e.g.<\/em> advertisement or invitation to bid, instructions to bidders, bid form, bid bond, or other bid form supplements). It is also important to delete such items from the project manual\u2019s table of contents before finalizing the contract documents for signature.<\/p>\n

What should not be contract documents?
\n<\/strong>It is tempting to worry only about what the contract documents are, but one should also be aware that confusion on these items is common. For clarification, the following should not be considered or indicated as contract documents:<\/p>\n