contract term program slides

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    Construction Contract Drafting Strategies:Crafting Enforceable Payment, Performance,

    Termination and Damages Provisions

    Christopher G. Hill, Esq.The Law Office of Christopher G. Hill, PC

    4870 Sadler Road, Suite 300Glen Allen, VA 23060

    (804) [email protected]: Construction Law Musings

    mailto:[email protected]://constructionlawva.com/http://christopherhill-law.com/about-law-office-of-christopher-g-hill-pc/http://constructionlawva.com/mailto:[email protected]
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    Payment Terms

    Its All About Expectations!

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    Method of Payment

    Determines Types of Disputes

    Must be Clearly Defined

    Things to Consider

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    Common Methods of Payment

    Lump Sum

    Cost Plus

    GMP

    Unit Price

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    Clarity

    Specific Scope

    Contractor Assumes Risk (except COs)

    Profit Margin Less Transparent

    Works Well with Competitive Bidding

    Lump Sum

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    Transparent

    Both Sides Benefit from Efficiencies

    Must Define Cost of Work

    Owner Assumes Risk of Unknown

    Variables

    Competitively Bid Subcontracts

    Limit on Self Perfomance

    Cost Plus

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    All Risk on Contractor

    Maximum Amount Paid by Owner Absent CO

    Clearly Defined Scope of Work

    Consider Sharing Savings

    Guaranteed Maximum Price (GMP)

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    Definition and Breakdown of Units

    Enough Info for Estimate

    Contractor Assumes Risk of Rising Costs, Etc

    Less Contractor Risk

    Owner Takes Risk of Total Quantities

    Unit Price

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    Progress Payments

    Schedule of Values

    Advance Payment Issues

    Timing

    Procedure

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    Submissions

    To WhomArchitects Role

    Owner Control?

    Progress Payments (2)

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    Conditions Precedent?

    Inspection

    Lien Waivers

    Certification from Contractor

    Certificate of Payment

    Owner Approval of Application?

    PAYMENT FROM OWNER (if Sub)?

    Progress Payments (3)

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    Retainage

    Withheld from Each Progress Payment

    Owner Protection

    Must Balance Protection and Price

    Usually 5 to 10 Percent

    From All Work incl. Subcontractors

    Check State Rules Release

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    Withholding Payment

    Be Careful When Doing So

    Only Where Contract Allows

    Undisputed Amounts

    Define Circumstances Carefully

    Statutory Schemes

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    Final Payment

    Same Concerns as Progress Payments

    Timing

    Conditions Precedent

    Waiver of Claims on Owner or Contractor Side?

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    Conditions Precedent to Final Payment

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    Late Payment/Non-Payment by Owner

    Require Financial Info from Owner

    Information To Enforce Rights

    Interest

    Stop Work/Termination

    Use Sparingly

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    Pay When Paid

    Pay when Paid v. Pay if Paid:

    Pay when Paid:

    Subcontractor not paid until Contractoris paid by the Owner

    Restrict only timing

    Pay if Paid:

    Condition precedentto right topayment

    Many jurisdictions will not enforce

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    Other Payment Terms

    Assignment of Contract

    Bonus/Penalty Clauses