Understanding and Negotiating Construction Contracts: A Contractor\'s and Subcontractor\'s Guide to Protecting Company Assets

ISBN-13: 9781394150205 / Angielski / Miękka / 2023 / 416 str.

Kit Werremeyer

Opis

Understanding and Negotiating Construction Contracts The complexities of construction contracts are made easy with this thorough and readable guide Construction contracts can be complex for both owners and contractors. For contractors, negotiating fair and balanced commercial terms in contracts is just as important as properly managing projects; a properly negotiated contract can mitigate unnecessary risk and unnecessary risk transfer. This, in turn, reduces exposure to financial liability for the contractor and for avoidance of contract claims and disputes. Understanding and Negotiating Construction Contracts provides a comprehensive and readable introduction to the world of construction contracts. Providing, for example, coverage of the four most common types of contracts—lump sum/fixed-price, cost-plus, time-and-materials, and unit-pricing—it promises to reduce uncertainty and allow contractors to enter contractual negotiations with greater confidence to be able to achieve a fair and balanced contract. This updated new edition reflects the up-to-date best practices to understand how to better negotiate the commercial terms and conditions in construction contracts. Readers of the second edition of Understanding and Negotiating Construction Contracts will also find: Updated information on indemnity, insurance, and negotiation An all-new chapter with a contract analysis checklist Real-world examples drawn from small residential, retail, large commercial, and international projects Understanding and Negotiating Construction Contracts is essential for construction professionals and college students studying construction contracts and the liabilities arising out of them.

Spis treści

Acknowledgments xiiiAbout the Author xvPreface xviiDisclaimer xixIntroduction xxiThe Goals of This Book xxiWhat Are the Benefits of This Book? xxiContractor & Owner Conventions xxiiPrivate Contracts or Government Contracts? xxiiKey Contracting Concepts xxiiTwo Types of Commercial Terms & Conditions xxiiiThe Most Important Commercial Terms & Conditions xxvThe Contracting Process xxvTerms & Conditions xxvThe Concept of Risk Transfer xxviThis Is a Book Developed Just for Contractors xxviiThree Final Suggestions xxviiChapter 1: Contracts: Basic Training 1What Is a Contract? 1The Steps to a Contract 1Coming to the Party? 2The Starting Point 3"Here's My Proposal" 4"Consideration," or Something of Value 5The "Happy Test" 5"Can That Person Sign This Contract?" 6Call in the Enforcer to Close the Breach! 6A Contract Example 8Strange Words & Long Paragraphs 10Contracting Myths 11Contract Negotiations 12Chapter 2: Types & Forms of Contracts 15Fixed Price & Fixed Schedule Contracts 16Reimbursable Type Contracts 16Combined Fixed Price & Reimbursable Contracts 18Cost Plus Fee Contracts 20Guaranteed Maximum Price Contracts 21Target Price Contracts 21Contracts with Performance Incentives 22Form of Contracts 23Some Final Contract Housekeeping-- Definitions 30Conclusion 32Chapter 3: Scope of Work 33The Scope of Work Matrix 37Scoping Drawings 39Conclusion 40Chapter 4: Terms of Payment & Cash Flow 41Cash Flow 42Interest Rates 44Periodic Progress & Milestone Payments 45Conclusion 59Chapter 5: The Schedule 61Float 62Time Is of the Essence 64Extra Time, but No Money 66Conclusion 68Chapter 6: Assurances of Performance 69Guaranties & Bonds 70What Does "Failure to Perform" Mean? 72What Is a Bond? 72Forms of Assurances of Performance 73Surety Companies 78Some Language Considerations on Guaranties & Bonds 82Types of Performance Assurances 82Conclusion 101Chapter 7: Insurance 103What Is Insurance? 104Claims Made vs. Occurrence 105Types of Insurance 106Important Issues Associated with Insurance 112Additional Insured Status 120Additional Insurance Basics 121A Typical Insurance Clause in a Construction Contract 134Safety 140Chapter 8: Indemnity 141Insurance & Indemnity 142Indemnity Definitions 142Transferring the Owner's Risks to Contractors 143Fairness Is Not a Consideration 143Is an Indemnity Required in a Construction Contract? 144Anti- Indemnity Legislation 144Examples of Indemnification Clauses 150Indemnification, Additional Insured Status, & Contractual Liability Insurance 157Owners Love CLAIMS! 161Negotiating Indemnity Clauses 162Knock- for- Knock Indemnities 165Conclusion 166Chapter 9: Changes 169Some Ground Rules 170Protecting the Project Manager 170Owners' Directives 171Constructive Changes 171Payment for Changes 172Sample Change Clauses 172Major Contract Changes 178Negotiating Change Clauses 179Conclusion 180Chapter 10: Disputes & Their Resolution 183What's a Project Manager to Do? A Short Story to Start With 183Disputes-- The Construction Contract's Bad Actor 184An Ounce of Prevention 186Dispute Resolution Options 186The Folks who Negotiate, Mediate, Arbitrate, & Litigate 188Dispute Resolution Clauses 189Conclusion 192Chapter 11: Damages 193Breach of Contract/Failure to Perform 194Contractors' Financial Exposure 194Actual Damages-- A Silent Risk? 194Liquidated Damages 196Consequential Damages 204Conclusion 206Chapter 12: Warranties 207A Workable Definition of Warranty 207Warranty Issues 208The Uniform Commercial Code 214When Is No Warranty Appropriate? 217Extended Duration Warranties 219Limiting Provisions in Warranties 221Pass- Through Warranties 221Latent Defects & Warranty 222A Sample Warranty 224Conclusion 224Chapter 13: Termination & Suspension 227Termination for Cause 228Termination for Convenience 229Suspension 232Cancellation 236Conclusion 236Chapter 14: Force Majeure 239Negotiating Clauses 239Sample Contract Language 240Conclusion 244Chapter 15: Other Contract Clauses 245Site Conditions 246Use of Completed Portions of the Work 251Patent Indemnity 252Secrecy & Confidentiality Clauses & Agreements 253Owner's Right to Inspect 254Independent Contractors 257Assignment 258Acceptance & the Punch List 260Advance & Partial Waiver of Liens 262Final Waiver of Liens 265Audit Rights 268Severability or Validity Clauses 269Venue & Applicable Law 269Florida Civil Code Chapter 47 Venue 270Texas Business & Commercial Code Annotated 272.001 271Venue and Choice of Law State Statutes 271Contractual Rendition? 271Changes in the Law 272Some Interesting Clauses to Close 273Chapter 16: A Construction Contractor's Contract Checklist 275Chapter 17: International Contracting 283International Contracts 284The U.S. Foreign Corrupt Practices Act 285Letters of Credit 286Split Contracts: Onshore & Offshore Contracts 288Political, Religious, & Economic Risks 289Overseas Private Investment Corporation (OPIC) 290Legal Systems in Foreign Countries 290Local Employees, Partners, & Agents 291Offshore Companies 292Currency Risks 293Applicable Law 297Joint Ventures 299Joint Operations 299Import & Export Considerations 300Understanding INCOTERMS 302The Export- Import Bank of the United States 305Where to Get Some Help-- Ask the U.S. Government 306Lastly, Use the Right Paper Size! 307Conclusion 307Chapter 18: What's It Take to Do Business in Southeast Asia? 309Patience Is Golden 310Walk the Talk 310Time and Money 311The US Foreign Corrupt Practices Act 312Center for Strategic and International Studies 313Trans Pacific Partnership (TPP) 314Backdoor to China and India 314SPECIAL Section-- The Socialist Republic of Vietnam (Vietnam) 316Resources for Business in Southeast Asia 317Chapter 19: Some Final Thoughts on Negotiating Contracts 319Why Negotiate? 320The Concept of Standard Terms & Conditions 320Risk Transfer Item 1: Get Rid of the Indemnity Clause! 322Risk Transfer Item 2: Don't Provide Additional Insured Status 323Risk Transfer Clauses, Insurance, & Safety 323How to Say No without Aggravating the Owner 324The Worst Contracting Word: "Reasonable" 324The Best Contracting Word: "Notwith- standing" 325Win- Win & Lose- Lose in Contract Negotiations-- Fairy Tales? 326Is There a Price for Bad Commercial Terms & Conditions? 327Terms of Payment 327Some Tips on Successful Negotiating 328Three First (and Final) Suggestions 328Resources 329Glossary 333Index 349

O autorze

Kit Werremeyer is owner and president of Southernstar Consultants LLC, Valrico, Florida, US, which provides training in construction contract negotiations and other professional services for engineering and construction companies both in the US and internationally. He has more than four decades' experience in negotiating fair and balanced construction contracts, sales, major project development, and construction contract dispute resolution.