Contract Term Program Slides
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Transcript of Contract Term Program Slides
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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