Category Archives: Contracts

Understanding & Modifying Key Construction Contract Terms

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As I mentioned, I  was one of three amigos who spoke on a Construction Contract webinar last week.  We had a good turn out and lots of very astute questions during the Q&A portion.  While you will miss all of my witty insightful helpful commentary, you can check out the slides for my portion, on understanding and modifying key terms, here:

Drafting Construction Contracts

My comrades’ presentations can be found by visiting Chris’s blog (for payment provision issues) and Craig’s blog (for damages and dispute resolution issues).  Happy viewing!

Got a Job Offer? Now What? Engineers and Architects: Think Before You Sign ! (guest post)

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Today, we have a guest post by Hayley Spencer, a freelance writer and attorney, on behalf of Martindale.com. She enjoys writing articles on contract law, law careers, and employment agreements.

Got a Job Offer? Now What?  Engineers and Architects: Think Before You Sign!

Architects & Engineers are not immune from employment agreements.  Those who go to work for a larger companies, especially, may be required to sign a contract of employment.  This form may be standard and identical for each employee, or each employee may have a contract with the employer that applies solely to him or her. Alternatively, there may simply be an oral contract about the type of work the employee will perform, benefits to be provided, and bonuses which are applicable.  If there is no oral or written form of agreement, the behavior of the professional parties involved can be identified as an implied employment contract. Some relationships may be that of a traditional employer and employee, while others may be set up as some type of an independent contract. Regardless of the specific details, it is always wise to have a qualified attorney review all such agreements before you sign them.

shaking hands on employment agreement
Why Do Engineers and Architects Need Employment Agreements?
Barring terms and policies that are actually illegal, anything and everything can be integrated into these types of agreement. Nonetheless, for engineers and architects, the law provides several safeguards regarding what can and cannot be negotiated upon as terms of employment. Furthermore, due to the gradual decrease in unemployment rates, employers have had to propose contracts for transitory workers loaded with language to safeguard them as much as possible. The sheer volume of potential variation, therefore, makes written contracts wise.

What Should You Consider Before Signing an Employment Agreement?
There are several particularly important regulations and policies of which you should be aware before signing any type of employment agreement.

First, is there a probationary period? Professionals do not just utilize probationary periods to analyze their new recruit’s fit. Setting a probationary time frame enables them to dismiss for purposes that would otherwise be inconsistent or inadequate.

Second, are oral offerings included in the contract? As with any relationship, optimistic forecasts of the future are common at the beginning of a work relationship. Nonetheless, your attorney can guide you through a list of solutions for engineers, architects and other specialists if employers’ pre-employment expressions were created negligently or if promises did not materialize.

What Common Aspects of an Employment Agreement are Generally Acceptable?
A professional confidentiality agreement is a part of a contract wherein the engineer or architect promises never to share any data regarding the details of how the employer’s enterprise is carried out, or of the employer’s confidential procedures, plans, solutions, information or equipment.

Similarly, a non-competition clause generally states that for a specified amount of time following the date the engineer or architect stops working as a part of the company, that person will not become employed by a competing firm or a firm focusing on an identical form of business.

An ownership of inventions clause applies to specialists who create or invent something as part of their work. By agreeing to this type of clause, the worker agrees that anything he or she creates while employed, or during a specified period of time following the contract termination, is treated as the creation or invention of the company and not that of the engineer or architect.

A no extra compensation clause specifies that if the worker becomes some type of executive or manager for the firm, he or she will not be subjected to extra compensation for accomplishing these duties.

Conclusion

 Of course, this brief guide will be insufficient to help you navigate all the potential issues involved with these types of employment contracts. Their details can vary widely, so seek out a professional for assistance.

Thank you, Hayley, for your post.   North Carolina employees should be aware that unless there is a specific employment contract, you are generally an “at will” employee.  That means that you can be fired for any reason or no reason whatsoever, so long as it is not due to your being a member of a protected class (race, religion, sex, etc.).  Also, covenants not to compete must be deemed reasonable to be enforceable.

 Any questions for Hayley?  Please post, below.  And, if you haven’t already, please sign up to get email delivery of all posts directly to your mailbox, by going to the sign up form.  At the same time, you’ll get the download link to my free white paper on the 7 Critical Mistakes that Design Professionals Make during Contract Negotiation and Execution that Sabotage their Projects & Invite Litigation.

Photo: (c) Aidan Jones via Creative Commons license.

5 Reasons Why You Need Arbitration for a Construction Dispute (Guest Post)

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Today we welcome another guest author to the blog– Jonathan Newby.  Jonathan is in the brokerage business, and runs a website relating to brokerage fees.  Thanks Jonathan for your sharing your thoughts today.

5 signArbitration may be a better alternative to some construction disputes, assuming that you use a qualified and skilled arbitrator or arbitration panel.  Here are five benefits for using arbitration over litigation:

  1. Arbitration means that the decision maker is an experienced industry professional instead of a lay jury.
  2. Arbitration can provide better protection for your assets by minimizing your risk of large losses sometimes seen with jury verdicts.
  3. Arbitration can provide flexibility in scheduling, versus court where you are told when and where to show up without much room to negotiate.
  4. Arbitration can put an end to your case faster.  The time taken by an arbitrator is usually less than that to get a case to court to resolve a construction dispute.
  5. Arbitration costs can be much less when compared to the one charged during any other legal process like litigation.

These are five reasons why arbitration may be better for your construction dispute, so consider using an arbitration provision in your next construction contract.

Editor’s Note:  As I’ve previously noted, there are pros and cons to arbitration in lieu of trial.  The better venue is in part based on the type and size of contract, as well as numerous other subjective considerations.  Discuss whether arbitration is appropriate for you with your construction law attorney.

Thoughts, comments, or questions?  Drop Jonathan or me a note in the comments section, below. 

Photo (c) freefoto.com.

 

 

Construction, er make that CONTRACT, Administration services: a primer (law note)

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[Update 12:42 pm ET, 11/3/11– CA is for Construction Contract Administration, or “Contract Administration” for short- thanks Liz O’Sullivan]

 One of the Architect’s responsibilities on a construction project is that of construction contract administration (“CA”).  While not every contract contemplates the architect performing a CA role, most commercial construction projects do.  What, exactly, should be included in the CA role?  The CA role can be whatever the parties agree upon.  In fact, the AIA A201 form contract documents anticipate that the architect’s role will be defined in an exhibit. 

Construction Construction Contract Administration
§ 4.2.10 If the Owner and Architect agree, the Architect will provide one or more project representatives to assist in carrying out the Architect’s responsibilities at the site. The duties, responsibilities and limitations of authority of such project representatives shall be as set forth in an exhibit to be incorporated in the Contract Documents.
What, then, should be included in the CA role assigned to the architect?  The nature of the construction administration role is project specific.  Some projects require a full-time on-site architect, a clerk of the works, or a weekly or bi-weekly site visit.  Because the nature of the CA role cannot be adequately described in a form document, it is especially critical that you take care to describe the specific CA duties assigned to the architectural team in detail.
site observation by architect
 
One of the main CA roles for the design team is that of site observation. Consider:
  • What frequency is contemplated for visits?
  • How long should those visits last? 
  • What is your role during such site visits?
I see many disputes that arise over a misunderstanding as to how often the architect should be on-site, and what his role is in observing the contractor’s work once he is there.  Again, being specific will only help you to avoid misunderstandings, possible litigation, or even extra liability later on.
 
Perhaps the most important concept to remember for your CA role on a construction project: never agree to “inspect” the contractor’s work.  Your role should be observation to see that the work is in general conformance with your design.  You cannot guarantee the contractor’s work (nor would such be insurable).  Therefore, be careful to use the word “observation” and not the word “inspect” in your CA description.
 
What have been your construction observation experiences? Drop me a line and tell me your story.  (And thanks to my many new readers to the blog this week!).
 
 
 
 Photo (c) Mark Hogan via CC.
 
 

 

Scope of your Design Services: Make Yours Detailed to Save Cavities Later! (Law note)

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I’ve written in the past about the benefits of having not only an explicit Scope of Work, but also a set of Exclusions from the Scope of Work, in your proposals and contract documents.  Recently, this issue has come up again for me in the course of advising clients who are now facing litigation over whether or not a particular service was to have been part of their lump sum design fee.

scope mouthwash versus scope of services
Do you know what is in your Scope of Services?

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The Scope of Services (and related Excluded services) should be as detailed as possible.  Consider all of the typical issues that can derail a project, and address them upfront, such as:

  • Additional Services: are they needed? How are they compensated?
  • The Proposal v. the Contract Description—which prevails?
  • Value engineering issues — does the designer share the credit?
  • Extended construction: Is A/E paid for extended delays leading to additional on-site administration?
  • Contingencies & Assumptions included in the design?
  • Number of bidding rounds included in the A/E’s fee before additional compensation is due?
  • Delivery of Owner equipment (Fixtures, Furnishings & Equipment) and delays associated with same?
  • Safe harbor provisions for expected errors & omissions?

This is just a short list of items to consider when drafting your Scope of Services. Remember, an ounce of prevention is worth a pound of cure, so make sure your proposals and contracts have thought through the entire scope of possible services prior to starting work.

 Thoughts? What issues have you run into on construction projects that could have been prevented with a good Scope of Services provision?  Share below.  
 
 
 
Photo (c) mandolux via CC.