Contracts

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Contracts
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Parts of a Contract

• Drawings
• General conditions Boilerplate Establishes
  right, responsibilities, authority, and
  obligations.
• Supplementary conditions Specific to each job,
• Specifications include all of contract except
  drawings

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Technical Specifications

• Qualitative description of items on project
• Either specs govern over drawings or the
  architect/engineer decides when drawings and
  specs do not agree.
• Need to be technically accurate and adequate
• Definite clear stipulations
• Fair equitable requirements
• Easy to use during bidding and construction
• Legally enforceable

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Design Specifications

• material and workmanship specifications (method
  and materials)
• - 2x4 _at_ 16 o.c.

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Performance Specification

• spec finished product, let the contractor select
  the material and method.
• Wall must support a 300 pound/LF vertical load
• Can incorporate both design and performance specs
  to specify finished product and method and
  materials.
• Wall must support a 300 pound/LF vertical load
  and be constructed from 8 x 8 x 16 concrete
  block

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Specifications

• Closed Spec requires specd item
• Proprietary Spec - name supplier
• Open Spec Required for public projects
• Or Equal AVOID lets engineer spec 1 item and
  then allow for other equal items
• Or Approved Equal Architect/engineer can decide
  whether a product is equal
• Reference Spec - References tests, product
  names, part of the technical spec.
• Standard Spec Standards from one job to the
  next.

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As Built Drawings

• Very important
• Provide the final location of all underground
  utilities, and facilities and all above ground
  facilities.
• Used as the reference document for future work on
  site
• Cheshire fair

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Matter of time

• Major aspect of contracts - Contracts can specify
  that a job be completed in either XX working days
  or XX calendar days.
• Working days
• used when weather delays can be expected - Any
  day except Saturday, Sunday and holidays.
• Calendar days are used when a definite opening
  date is desired.
• Dept store must open before thanksgiving

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How many days

• Project schedule
• submitted prior to starting work
• sets work schedule.
• Limitation of Operations
• Times owner does not want contractor operating on
  the site.
• Liquidated Damages
• Compensation for financial other losses due to
  late opening. (10,000/day after Nov 20)

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Types of Delays

• Delay caused by contractor or contractors agents
  owner can fire contractor
• Delay caused by owner or owners agents -
  contractor can ask for time extension
• Delay caused by force majeure or act of God.
  Usually no for either owner or contractor
• No damage for delay clause protects party from
  liability due to delays caused by that part

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Exceptions

• Delay not contemplated Labor strikes, back
  orders on supplies.
• Active interference action by a 3rd party which
  causes work to slow or stop - environmental
  pickets
• Delays of unreasonable duration delays by owner
  which are unreasonable in length
• Fraud or bad faith

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Exceptions

• Allow contractor/owner to get time extensions for
  project
• Extension of Time if running late, get an
  extension of time.
• Excusable Delay act of God, labor strike,
  flooding, etc.

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What can Happen

• Acceleration
• Actual owner says hire more workers. Owner pays
• Constructive owner refuses time extension so
  contractor has to hire more help. If owner is
  cause of delay, which leads to falling behind,
  contractor may be able to collect for extra help.

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What can Happen

• Suspension of Work
• gives owner ability to stop work. Owner may
  have financial trouble
• Termination
• Default of contractor
• Convenience of owner
• Owner may find that the project is too expensive
  and decide to terminate the project.

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Effect of Delays

• Delay caused by contractor or contractors agents
  owner can fire contractor
• Delay caused by owner or owners agents -
  contractor can ask for time extension Delay
  caused by force majeure or act of God. Usually
  no for either owner or contractor

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Home Office Overhead

• Operations Maintenance of home office
• Eichleay Formulae
• OHproj (Billingsproj)/(Billingstotal)OHTotal
• For Delay
• OHdelay (OH/Duration)proj(days of delay)

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CONTRACT DESCRIPTORS

• Contract
• Agreement between two parties that is enforceable
  by law for their mutual benefit.
• Litigation
• Court decision, which is binding on both parties
• Executed
• When both parties have fully performed in
  accordance with the contract terms, i.e.,
• Executory
• When some portion of agreement remains undone,

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Contracts can be

• Bilateral
• Both parties promise something to each other.
  Most construction contracts are bilateral.
• Unilateral
• One party promises something while the other
  party exchanges something other than a promise.
  Action may substitute for promise, i.e., Ill
  sell you 100 RR ties for 6 each gt You send me a
  check for 600 you own RR ties. You are in
  control of whether or not contract is formed.

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Contracts can be

• Expressed
• Terms are clear, concise, explicit and well
  defined.
• Implied
• Terms not clearly stated but established thru
  inference and deduction, i.e. Drive to parking
  lot, give attendant 2 and park car
• An expressed contract can be altered by an
  implied contract if the project described in the
  expressed contract, once signed, is significantly
  changed. Then an implied agreement to do the
  work for hourly rates could become binding.

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Contracts can be

• In Joint Agreement
• individual parties joined into one party in
  legal and liability sense,
• Several or Separate
• Each party has a liability that is separate from
  any other party.
• Joint and Several
• Binds individuals as a unit each individual
  accepts separate accountability.

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Contract disputes

• Usually solved by courts. By using standard
  provisions in contracts it makes it easier for
  the courts to reach a decision.

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Torts

• disputes that relate to matters not addressed by
  statutory law or contract obligations.
• Wrongs committed against others that do not
  involve contracts.
• Common law interpretation required
• Can result from a special action or can be caused
  by failure to act
• Offense against person that does not involve a
  crime or law violation
• A tort can be a crime

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To file a tort

• 1) Establish that one party had a duty to the
  other party breach in performance of duty
• 2) How damage is direct consequence of (1)
• Examples slander, libel
• Standard of care Conduct expected of someone in
  a given capacity.
• Attractive Nuisance A construction site is an
  attractive nuisance. A tort action of trespass
  could be denied because of this.
• Contributary Nuisance Offered as a defense to
  avoid liability from an injury. Injury occurred
  due to actions of injured party.

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Bond Terms

• Principal
• Principal debtor is party whose performance is
  guaranteed
• Surety
• Company pays if principal does not perform
• Obligee
• Party to whom promise of principals performance
  is made

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Bonds

• Miller Act (1935)
• Surety bond required for all federal assistance
  projects.
• Bid bond
• Bond that contractor will enter into binding
  contract will provide payment performance
  bonds.
• Performance bond
• Payment bond
• Protects owner if the general contractor does not
  pay the subs or suppliers

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Elements of a Contract

• Meeting of Minds
• Agreement on a basic meaning legal implications
  of the contract.
• Unreality of Consent
• cannot agree on basicsgtgtno contract
• Contract is based on fact.

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Contract is null and void if

• Unilateral mistake or mutual error
  (Unintentional)
• Parties do not have same perception of the
  identity of the subject of the agreement
• Subject does not exist due to death, destruction,
  etc.
• Misrepresentation
• Fraud (intent to deceive)
• Fraud (deliberate failure to provide relevant
  information vital to the agreement)
• Duress (forced consent)
• Error in plans

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Offer Acceptance

• Offer
• one person signifies to another a willingness to
  enter into a binding contract on certain terms.
• Acceptance
• creates contract provided it was made in the
  manner time specified in the offer.
• Counter Offer
• if acceptance is not definite, unqualified and
  unconditional. Once a counter offer is made, the
  original offer is no longer valid.

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Consideration

• Something of value
• Prime reason for entering a contract. Both
  parties must have consideration or contract is
  void. Consideration does not have to be actual
  benefit, i.e., pay someone not to marry binding
  upon acceptance.

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Lawful Subject Matter

• Contracts must have it.
• Subject matter cannot violate any fundamental
  dictate of common law, or be contrary to public
  policy. Collusion or bid rigging is illegal and
  any contract between two parties for the purpose
  of rigging bids is void.

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Competent parties

• Cannot be insane, drunk, or a minor.

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Estoppel

• Contract becomes binding in spite of the fact
  that no formal agreement was made between
  parties.
• Implied agreement, i.e., go to a movie, pay gtgt
  see movie or get a refund.
• Promissary Estoppel
• Frequently encountered in construction. Bid by
  phone, which is used in a larger bid package, is
  binding.

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Assignment of Contracts

• Transfer rights and responsibilities to a 3rd
  party not originally involved in the contract.
• Second party cannot be placed in a worse position
  than it would have without the assignment.
  Loans, etc.

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Real Property

• Real Property
• Land and attachments (buildings, permanent
  fixtures on land)
• Liens
• Legal claim on property. Party has the right to
  retain property until debt is satisfied.
• Tax Lien Right of government to retain
  possession of property until taxes are paid.
• Mechanics Lien Right to place a claim on land
  on which work was performed. Includes all
  craftsmen and suppliers. Needs written contract

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Real Property

• Eminent Domain
• Right of public to take land at fair market value
  when the land will be used to provide a benefit
  (service) to the public.
• Condemnation exercising the right of eminent
  domain.
• Zoning

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Stop Notice

• Notify owner of non-payment by general
  contractor. Can be placed by supplier, sub,
  worker.

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Agents

• Principal is liable for all contracts made by the
  agent.
• Agents
• must display complete loyalty good faith,
• obey instructions,
• not exceed authority,
• cannot compete with the principal,
• profit at principals expense,
• or do any self dealing.

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Contingent Liability

• Injured 3rd party is not or should not be
  affected by a contract between two other parties.
  Therefore, injured worker can sue owner and
  contractor. Engineers can be 3rd parties due
  to inspection.