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Renovate Repair Legal Issues Owner View


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Renovate Repair Legal Issues Owner View

  1. 1. Overview of Significant Contract Issues Renovation, Remodeling & Repair of Buildings Robert P. Hall, Jr., Esq.
  2. 2. Introduction • What is a contract? • Classification of construction contracts • Use of standard forms • Why is a lawyer recommended? • List of separate “contract” documents • General comments—”delivery systems”
  3. 3. What is a contract? • Function—record the terms of the agreement---- (a) should define the scope and price of the services and product to be provided—(b) should allocate the risks between owner and contractor, and (c) should provide level of prediction when selected events arise • What “if” certain events arise—what will be the result
  4. 4. General Conditions-Table of Contents • General Provisions • Owner • Contractor • Administration of the contract • Subcontractors • Construction by owner • Changes in the Work • Time • Payments and completion • Protection of property • Disputes • Indemnification • Insurance/Bonds • Correction of Work • Termination • Attorney Fees
  5. 5. Classification of Contracts • Lump sum—complete work for a fixed price • Cost plus—contractor paid for all costs plus a stated fee—or time/materials—all costs plus stated overhead and profit • Cost up to a maximum guaranteed price- contractor gets costs plus overhead/profit— but only up to a maximum limit
  6. 6. Delivery Systems • Design Bid—traditional—architect provides plans—general contractor provides bid. Owner enters into separate contract with architect and general contractor • Design Build—Owner contracts with one firm who handles design and construction • Construction Manager—Owner contracts with one firm who in turn hires designers and contractors
  7. 7. Use of Standard Forms • Preprinted form agreement prepared by industry groups—such as architect and contractor organizations—eg—AIA—AGC • In theory—could substitute for a tailored agreement—save attorney fees • Reflect bias of the industry group who prepared them—but they reflect the industry’s negotiating position—important to generally understand
  8. 8. Standard Forms--Advantages • Advantages—easier and less expensive to prepare—even with an addendum • Easier to understand—interpreted by courts-owner can get a higher level of predictability in the event of a dispute • In author’s experience—contractor’s more agreeable to industry forms with addendums than specially tailored agreements
  9. 9. Standard Forms--Disadvantages • Reflects bias of the group who prepares them • Not prepared for common interest developments —some view them as not applicable to such projects • Changes reflected in the addendum to the standard form may make understanding of the total agreement when read together difficult
  10. 10. Standard Forms—General Comments • Whether used or not—they reflect the organization’s current position on standard contract issues—their use will provide a good reference point for negotiations • As discussed below—the most used form—AIA— has undergone significant changes from the 1987 to 1997 and now to 2007 versions
  11. 11. Separate Contract Documents • Main agreement—(eg—AIA 101)—brief form –describes the project—scope—and price—incorporates other contract forms • General Conditions—most important contract document—mostly legal— provisions of general application • Special conditions—technical requirements • Plans--Specifications
  12. 12. AIA “family” of documents • Contracts labels—main documents--”A” series— owner—contractor—”B” series-owner—architect • G Series—standard forms during the progress of the work—eg—change orders—request for clarifications etc.— • AIA form A201—attempts to set forth rules and procedures for virtually all aspects of the work—most important legal document—
  13. 13. General Conditions (e.g. AIA201)—key provisions • 1.1.1—contract documents—make sure now more than ever that all contract documents are identified • 1.2—intent of contract documents • 1.3—ownership and use of drawings • 2.1 and 2.2—information and services required by the Owner
  14. 14. General Conditions (key provisions—continued) • 2.3 and 14.2—owner’s right to stop the work or terminate the contract • 3.2—review of contract documents and field conditions by contractor (key new 1997 change) • 3.5 warranty provisions • 3.9--superintendent
  15. 15. General Conditions (Continued) • 3.12—shop drawings—product data and samples • 3.18—indemnification issues • 4.1—architect issues • 4.3-4.5—claims and disputes (see next discussion) • 7.1-7.3—changes in the work
  16. 16. General Conditions (Continued) • 9.2—schedule of values • 9.3—applications for payment • 9.8-substantial completion • 9.10—final payment and related issues • Article 11—insurance and bonds • Attorney fee provision/may need to be added
  17. 17. Architect Agreement—general comments • additional services issue • obligation to design within budget • ownership of and use of documents • indemnification • architect sign off letter • waiver of consequential damages • arbitration of disputes • Owner’s review and approval of the design before the next of the repair process starts