CONTRACT CLAUSES EGR 4050 JOHN W. TULAC Attorney at Law, Professor Emeritus Copyright 2018 ANALYSIS OF THE CLAUSES These are clauses that engineers may encounter in contracts drafted by potential clients Your job is to read each clause and determine whether it is good for you, bad for you, or ugly for you You will need to take your time with some of these clauses; some are not easy to read or understand Welcome to the real world BEST EFFORTS CLAUSE Professional shall use her best efforts in the performance of all her duties under this Agreement for professional services BEST PRACTICES CLAUSE Engineer warrants and represents that it engages at all times in best practices for the performance of its services set forth in this Agreement. MOST FAVORED CLAUSE The price for the services is and will continue to be the lowest price charged by Engineer for the same or substantially similar services. If at any time during the term of this Agreement, Engineer offers or sells the same or substantially similar products to a third party at a lower price than the price set forth herein, Engineer will immediately notify Client and reduce the price for the applicable deliverables to such lower price on any pending and future services. TIME CLAUSES Time is of the essence. Time Clauses Schedule of Services - OK Timeline Exhibit - OK “Deadline” or “Deadlines” - Not OK Description of purpose of schedule, timeline, deadline, etc. Often necessary, but potentially dangerous STANDARD OF CARE CLAUSE THREE SIMPLE INDEMNITY CLAUSES Engineer agrees to hold harmless and indemnify Client from any and all liability, including cost of defense, arising out of performance of the services described herein. Engineer agrees to hold harmless and indemnify Client from any and all liability, including cost of defense, arising out of Engineer’s negligence, whether it be sole or in concert with others, in connection with performance of the services described herein. Engineer agrees to hold harmless and indemnify Client from and against liability arising out of Engineer’s negligent performance of services. MUTUAL INDEMNITY CLAUSE The Consultant agrees, to the fullest extent permitted by law, to indemnify and hold harmless the Client, its officers, directors and employees (collectively, Client) against all damages, liabilities or costs, including reasonable attorneys’ fees and defense costs, to the extent caused by the Consultants negligent performance of professional services under this Agreement and that of its subconsultants or anyone for whom the Consultant is legally liable. The Client agrees, to the fullest extent permitted by law, to indemnity and hold harmless the Consultant, its officers, directors, employees and subconsultants (collectively, Consultant) against all damages, liabilities or costs, including reasonable attorneys’ fees and defense costs, to the extent caused by the Client’s negligent acts in connection with the Project and the acts of it ...

1. CONTRACT CLAUSES
EGR 4050
JOHN W. TULAC
Attorney at Law, Professor Emeritus
Copyright 2018
ANALYSIS OF THE CLAUSES
These are clauses that engineers may encounter in contracts
drafted by potential clients
Your job is to read each clause and determine whether it is good
for you, bad for you, or ugly for you
You will need to take your time with some of these clauses;
some are not easy to read or understand
Welcome to the real world
BEST EFFORTS CLAUSE
Professional shall use her best efforts in the performance of all
her duties under this Agreement for professional services
BEST PRACTICES CLAUSE
Engineer warrants and represents that it engages at all times in
best practices for the performance of its services set forth in
this Agreement.
MOST FAVORED CLAUSE
The price for the services is and will continue to be the lowest
price charged by Engineer for the same or substantially similar
services. If at any time during the term of this Agreement,

2. Engineer offers or sells the same or substantially similar
products to a third party at a lower price than the price set forth
herein, Engineer will immediately notify Client and reduce the
price for the applicable deliverables to such lower price on any
pending and future services.
TIME CLAUSES
Time is of the essence.
Time Clauses
Schedule of Services - OK
Timeline Exhibit - OK
“Deadline” or “Deadlines” - Not OK
Description of purpose of schedule, timeline, deadline, etc.
Often necessary, but potentially dangerous
STANDARD OF CARE CLAUSE
THREE SIMPLE INDEMNITY CLAUSES
Engineer agrees to hold harmless and indemnify Client from any
and all liability, including cost of defense, arising out of
performance of the services described herein.
Engineer agrees to hold harmless and indemnify Client from any
and all liability, including cost of defense, arising out of
Engineer’s negligence, whether it be sole or in concert with
others, in connection with performance of the services described
herein.
Engineer agrees to hold harmless and indemnify Client from and

3. against liability arising out of Engineer’s negligent performance
of services.
MUTUAL INDEMNITY CLAUSE
The Consultant agrees, to the fullest extent permitted by law, to
indemnify and hold harmless the Client, its officers, directors
and employees (collectively, Client) against all damages,
liabilities or costs, including reasonable attorneys’ fees and
defense costs, to the extent caused by the Consultants negligent
performance of professional services under this Agreement and
that of its subconsultants or anyone for whom the Consultant is
legally liable.
The Client agrees, to the fullest extent permitted by law, to
indemnity and hold harmless the Consultant, its officers,
directors, employees and subconsultants (collectively,
Consultant) against all damages, liabilities or costs, including
reasonable attorneys’ fees and defense costs, to the extent
caused by the Client’s negligent acts in connection with the
Project and the acts of its contractors, subcontractors or
consultants or anyone for whom the Client is legally liable.
Neither the Client nor the Consultant shall be obligated to
indemnify the other party in any manner whatsoever for the
other party’s negligence.
DAMAGES CLAUSE
The term Damages shall mean any and all damages, liabilities,
obligations, penalties, fines, judgments, claims, deficiencies,
losses, costs, expenses and assessments (including without
limitation income and other taxes, interest, penalties and
attorneys and accountants fees and disbursements).

4. DAMAGES CLAUSE
UNLESS OTHERWISE EXPRESSLY HEREIN PROVIDED,
EACH PARTY’S LIABILITY TO THE OTHER PARTIES
UNDER THIS AGREEMENT SHALL BE LIMITED TO
DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT
ACTUAL DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY HEREUNDER, AND ALL OTHER
REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE
WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NO
PARTY SHALL BE LIABLE FOR CONSEQUENTIAL,
INCIDENTAL, PUNITIVE, EXEMPLARY, OR INDIRECT
DAMAGES, LOST PROFITS OR OTHER BUSINESS
INTERRUPTION DAMAGES, WHETHER IN CONTRACT, IN
TORT, UNDER ANY INDEMNITY PROVISION, OR
OTHERWISE.
DAMAGES CLAUSE
Neither party shall be responsible for consequential, indirect,
special or punitive damages.
DAMAGES CLAUSE
Each of the Parties is liable to the other for any direct damages
arising out of or relating to its performance or failure to
perform under this Agreement. Except for a Party’s breach of
Article 10 (Indemnities) or Article 8 (Confidentiality), in no
event will either Party be liable to the other for damages due to
a breach of this Agreement in excess of the amount of the
Service Fees paid by Company to Service Provider over the last
twelve (12) months.

5. DAMAGES CLAUSE
The Parties shall be entitled to all remedies or damages
available to them in equity or at law under the Uniform
Commercial Code.
CHANGE ORDER
In the event that Service Provider is requested or required to
perform services that are outside the scope of this Agreement,
such services and a compensation schedule therefore must be
mutually agreed upon by the parties in a written change order
(Change Order) prior to the provision of said services. The
Change Order constitutes an amendment to the applicable Work
Order and the services set forth therein shall be deemed to be
Services part of such Work Order.
TERMINATION CLAUSE
7. Term and Termination.
7.1 Term. Unless earlier terminated as set forth below,
the term of this Agreement shall begin on the Effective Date
and shall continue until December 31, 2017 (“Initial Term”),
and shall thereafter automatically renew for subsequent one (1)
year terms, unless notice of termination is given not less than
six (6) months prior to the end of the Initial Term or annual
renewal term.
TERMINATION CLAUSE
7.2 Termination for Convenience. Either party may
terminate this Agreement upon written notice to other party and

6. such termination shall be effective six (6) months after the date
such notice is received by the non-terminating party. After
termination, ENGINEER shall still provide maintenance
services at its normal hourly rates for a period of two (2) years
as measured from the Effective Date and ENGINEER agrees to
use its good faith efforts to provide such services on a timely
basis, but the response times in the Software Maintenance
Procedures attached hereto shall not apply after the date this
Agreement terminates.
TERMINATION CLAUSE
7.3 Termination for Breach. Either party may terminate
this Agreement upon written notice if the other party breaches
any material obligation under this Agreement or the Purchase
and Sale Agreement For Software entered into concurrently
herewith and fails to cure such breach within thirty (30) days
after receiving written notice of the breach. Such notice shall
specify the nature of the breach in reasonable detail. Should
ENGINEER terminate this Agreement for COMPANY’s breach,
the terms of Section 7.2 (with respect to reimbursement of costs
and Additional Compensation) shall apply.
TERMINATION CLAUSE
7.4 Effect of Termination. Upon termination of this
Agreement for any reason, any amounts owed to ENGINEER
under this Agreement before such termination, or if such
termination is by ENGINEER for a material breach by
COMPANY an amount not less than the Minimum Monthly Fee
for not less than six (6) months after notice of termination is
given resulting in such termination, will be due and payable
within thirty (30) days of such termination, and each party shall
promptly return to the other party or destroy all Confidential

7. Information of such other party in such party’s possession or
control and certify in writing to such other party that it has fully
complied with these requirements. If a breach is the failure by
COMPANY to timely pay fees due under this Agreement or the
Purchase and Sale Agreement For Software upon five (5) days’
written notice ENGINEER may suspend working on any Project
and providing maintenance and support until payment has been
received.
WORK PRODUCT
8.1 Work Product. All tangible items prepared by
Engineer, including but not limited to all drawings,
specifications, calculations, data, notes and other materials and
documents, including electronic data furnished by Engineer to
Client and to Subcontractors under this Agreement ("Work
Product") shall be instruments of service, and Engineer shall
retain the ownership and property interests therein, including
the copyrights thereto.
INSURANCE
Single Limit
Aggregate Limit
Types
Professional
Commercial, including Fire
Automobile
Workers Compensation
Questions 1 – 5 are True/False. Mark A for True and B for
False.

8. 1.
In C++, the variables total and ToTaL are NOT considered to be
the same variable.
A) True
B) False
2.
The body of a while loop is only executed if the loop condition
is false.
A) True
B) False
3.
Pseudocode is considered a “high level” programming language.
A) True
B) False
4.
An expression containing the operator && is true only if both
its operands are true.
A) True
B) False
5.
else if statements are tested sequentially until a match occurs.
A) True
B) False
Questions 6 – 15 are Multiple Choice and worth 1 point each.
6.
Which of the following is a valid constant declaration?
A) const FRED int = 5;
B) int const FRED = 5;
C) int FRED const = 5;
D) const int FRED = 5;
E) FRED const int = 5;
7.
const, while, if, and int are examples of:
A) reserved (key) words
B) identifiers

9. C) variables
D) compiler directives
E) program comments
8.
Which of the following is a valid C++ assignment statement?
A) x = q – (y * z);
B) y + z = x;
C) y = b * c
D) x = (x + (y z);
E) x = a b;
9.
The formula:
can be represented in C++ as:
A) x = a – b / c – d;
B) x = a – b / (c – d);
C) x = (a – b) / (c – d);
D) x = (a – b) / c – d;
E) (a – b) / (c – d) = x;
10.
Which of the following is a valid variable name?
A) 2ndName
B) %Last_Name
C) year03
D) @Month
E) #55
11.
Which library must be included to enable keyboard input?
A) iomanip
B) cstdlib
C) input
D) iostream
E) kbdin
12.
Which of the following is an invalid variable name?
A) Part time

10. B) part_time
C) full_time_job
D) FullTime
E) _Parttime
13.
Which library must be included to enable formatted output?
A) output
B) scrnout
C) format
D) cstdlib
E) iomanip
14.
Which of the following is an invalid variable name?
A) _64
B) 64_
C) Sum_
D) _S_u_m_
E) _Sum
15.
What is the comment section at the beginning of a program that
gives information about the author and the program called?
A) prologue
B) prelude
C) heading
D) preliminaries
E) foreword
Questions 16 – 19 are Matching and worth 1 point each.
A. sentinel B. running total C. cin D.
condition E. counter
16.
A __________ is evaluated to true or false each time an if
statement is encountered in code.
A) sentinel
B) running total
C) cin
D) condition

11. E) counter
17.
A while loop that is controlled by the user ends with a
__________ value.
A) sentinel
B) running total
C) cin
D) condition
E) counter
18.
A while loop that runs a pre-determined number of times is
controlled by a __________.
A) sentinel
B) running total
C) cin
D) condition
E) counter
19.
A variable that accumulates the sum of numbers entered by the
user is accumulating a __________.
A) sentinel
B) running total
C) cin
D) condition
E) counter
For Questions 20 – 24, determine the logical value of the
comparison. Mark A for True and B for False.
Assume that a=10, b=6, c=10, and d=8.
20.
a == b
A) True
B) False
21.
c < d

12. A) True
B) False
22.
c == a
A) True
B) False
23.
a >= c || b >= d
A) True
B) False
24.
(c < b && d < b) || (a != c)
A) True
B) False
Trace through the following Code:
25.
for (i = 3; i <= 6; i++)
{cout << "*";}
A) *
B) **
C) ***
D) ****
E) 3 4 5 6
Consider the following code for Questions 26 and 27:
int count = 10;
int num = 4;
do
{
if ((count % 2) == 1)
{
num += 3;
}
else
{
num -= 2;

13. }
count--;
}
while (count > 5);
26.
What is the value of count after the following code is executed?
This question is worth 2 points.
A) 1
B) 10
C) 5
D) 4
E) 2
27.
What is the value of num after the following code is executed?
This question is worth 2 points.
A) 1
B) 10
C) 5
D) 4
E) 2
For Questions 28 – 30, determine the result of each expression.
28.
3 * 3 + 3 / 3 – 3 % 3
A) 0
B) 10
C) 1
D) 4
E) 3
29.
6 * (8 – 12 / 2) + 9 / 3
A) 1
B) 10
C) 5
D) 4
E) 15

14. 30.
(8 – 3) % 2 + 12 / 4
A) 1
B) 10
C) 5
D) 4
E) 15
CONTRACT CLAUSES FOR
PROFESSIONAL ENGINEERING SERVICES
JOHN W. TULAC
Attorney at Law
Copyright 2014, 2020
CONTRACTS AND RISK
Risk analysis is the bridge between tort law and contract law
Contracts help us prevent, manage, and mitigate risks that we
identify and assess
Contracts allow us to allocate risks and responsibilities for or
consequences of risk
Contracts may or may not help us deal with risks that we do not
identify and assess
CONTRACT CLAUSES
How an engineer views a contract
Scope of work OK
Time of performance OK
Price OK

15. Terms and Conditions UGH!
Terms and Conditions are important
Like accounting principles. What the balance sheet giveth, the
footnotes taketh away.
So yes, you have to read the whole thing ALL THE TIME!
HOW TO READ AND ANALYZE A CONTRACT
What is the contract subject matter & purpose?
Are the rights and obligations of each party clearly stated?
Does the contract clearly detail what each party must do and
when each thing must be done?
Are risks (and “what ifs”) addressed?
Is it reasonably balanced?
Do the parties (not just the lawyers) understand it?
Use a checklist or outline approach
PRECISION COUNTS
Remember these two questions?
What does it mean to be a design professional?
What does it mean to me to be a design professional?
Precision versus accuracy in contract language
Ambiguities create uncertainty and risk and sometimes
opportunity
STANDARD OF CARE
It’s the law.
It doesn’t need to be stated in the contract
STANDARD OF CARE
It’s the law.
It doesn’t need to be stated in the contract

16. Owners will put it in the contract anyhow
STANDARD OF CARE
It’s the law.
It doesn’t need to be stated in the contract
Owners will put it in the contract anyhow
AND THEY WILL SCREW IT UP!!!!!
STANDARD OF CARE
It’s better to leave it out
It is possible for you to agree by contract to a higher standard
of care
If it must be in the contract at least make sure it is accurate
AVOID!
Absolutes
Exculpatory clauses (for the owner)
Construction contract language
Sale of goods language
Guarantees or warranties of work
Distinguish representations of fact
Representations of fact are powerful in contracts
DAMAGES
Remedy for breach of contract is damages
Not specific performance or other equitable relief
Measure of damages
Compensatory (usual measure)
Consequential (beware!)

17. COMPENSATORY DAMAGES
General measure of damages
Difference between what is promised and what is performed
under the contract if performance is less than what is promised
Breach of contract
Substantial performance
Opportunity to cure the breach
CONSEQUENTIAL DAMAGES
Damages beyond the price of the contract itself
Example: penalty on another contract or lost profits
Dangerous
Must be agreed upon in the contract
Generally, must be bargained for in advance
Can be hidden in plain view
TIME IS OF THE ESSENCE
An often included clause, short and “sweet”
WHAT DOES IT MEAN?
TIME IS OF THE ESSENCE
It means time is important
As an aside
For the design professional, it also means that time is money
Expedited work can support a higher price
If a party does not perform on time, it means that there is a
breach of contract
HOWEVER…
TIME IS OF THE ESSENCE

18. Most of the time, mere delay in performance does not amount to
serious breach of contract
By itself, this sentence doesn’t mean much
If the objective reason why time is important is not included,
then mere delay, absent more, is not in and of itself always
material breach
Why is time important?
Example: Restock versus reception
One is important and has consequences; the other doesn’t
IF TIME IS TRULY IMPORTANT
THAT IS, OF THE ESSENCE
Then, it must be bargained for
The party that must perform on time must know of its
importance, the consequences of delay, and the willingness to
be liable in damages for the consequences of delay,
AND, IT MUST BE IN WRITING
No surprise, this can get contentious
DAMAGES
Do not agree to damages resulting from things you cannot
control
Do not, as a general rule agree to consequential damages
If you must, set limits; get something in return
Liquidated damages
Who should bear the risks? Who’s making the big money?
Hint: It isn’t the design professional
No punitive damages
INDEMNITY
Easy concept

19. Ridiculously and unnecessarily difficult clauses
Indemnity is an agreement by two or more parties to a contract
allocating responsibility to pay for damages to third parties
arising out of the contract (including torts committed in the
performance of the contract)
A third party is someone not a party to the contract
INDEMNITY
Contract allocation of liability for damages
Can be allocated regardless of fault
Owners frequently overreach
So do general contractors
Gravity
Do not agree to indemnify for something outside your control or
responsibility
Set limits; get concessions
INSURANCE CLAUSES
Necessary to the contract
Insurance companies can help. Really!
Different coverages
Single
Aggregate
Appropriate limits
Who should pay?
CHANGE ORDERS
K.I.S.S.
Follow the procedures
Changes must always in writing
Don’t get suckered into doing work now and documenti ng the
change later
Give something, get something

20. A FEW MORE THINGS
Waivers
Termination of contract
Form contracts
Have your own standard contract
THE DESIGN PROFESSIONAL’S
PERFECT CONTRACT
All liability is negligence based
Direct (compensatory) damages only
A maximum limit on design professional’s liability
No variation on the legal standard of care
No warranties or guarantees
Reasonable time