contract term program slides

7/31/2019 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

contract term program slides

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