Advantages and Disadvantages of Model Form Contracts

Advantages and Disadvantages of Model Form Contracts

Standard-form construction contracts have several advantages. First, since documents are widely used in the industry, the terms of the contract are usually well understood by the parties involved in the construction, which hopefully leads to fewer misunderstandings at work. Unlike contracts that have been designed from scratch and may not address important issues, contract forms are usually comprehensive and cover virtually any issues that may arise in a construction project. Since model contracts have been used over time, case law has developed that deals with specific contractual clauses and the terms used in these types of contracts, allowing parties to resort to earlier decisions when problems arise to see how certain key provisions have been interpreted. Finally, model contracts are easy to obtain at a relatively low cost. If you have decided to use a standard form construction contract for your project, it is always advisable to have this contract reviewed by a lawyer or other professional. A professional who is familiar with this type of contract, as well as construction practices, can determine what contract changes may be required for your particular project. Given the propensity of construction projects to cause problems such as cost overruns, delays in deadlines, and payment disputes, it`s important that your contract protects your interests. Overall, a well-suited standard construction contract is the best way to ensure that you achieve the desired end result and that any dispute is resolved fairly and appropriately. There are many standard-shaped construction contracts on the market. Most have been developed by professional groups and organizations whose members play an important role in the construction industry.

Organizations whose standard-form construction contracts are widely used include the American Institute of Architects (AIA), the Engineers Joint Contract Documents Committee (EJCDC), and the Associated General Contractors of America (AGC). Each organization has developed a set of contractual documents that deal with the different types of construction projects, the different relationships between the parties that may exist in a project (p.B contractor/subcontractor, architect/owner, etc.) and specific project tasks (p.B. payment requests, privileges, etc.). If someone tells you it`s a standard contract, ask them who it is. Although the word “standard” sounds like a group of lawyers formulated the contract after discussing and agreeing on the terms and language to be used, it is never so. Construction projects, whether it`s a simple office renovation or a multi-million dollar factory expansion, can be one of the most challenging projects a business unit has completed. A well-designed construction contract can be the key to a successful project by defining the expectations, rights and responsibilities of the owner, contractor and other parties involved in a modern construction project. Given the crucial role that a good contract can play in a successful construction project, it is important to enter into a contract that meets the requirements of your specific project.

In many cases, the parties rely on standard contracts. If you plan to use a standard form construction contract, it is important to know the pros and cons of doing so. Know the disadvantages of standard contracts so that you can pay attention to them when concluding a contract. As a rule, you will find the boilerplate towards the end of the contract. It refers to the standardized language used in most contracts. Most people don`t go through this section because they only see it as a legal formality. Often, the problem is not with what the mat contains. it`s more with what it leaves out. Boilerplate is usually at the end of a contract. This is a standardized language that most contracts have.

Many people don`t even read this section and consider it jargon. The problem is usually not what the boilerplate inserts, but what it omits. For example, if the person issuing the contract has removed the part that says the loser in a lawsuit will pay the winner`s attorney`s fees, you could be at a disadvantage even if you win a dispute. Another example of boilerplate issues is the section that states that disputes are resolved through arbitration instead of a lawsuit. If you wish to reserve the right to bring an action, request that this standard section be deleted. Read all text modules carefully to look for sections you disagree with. One of the main problems with standard contracts is pricing. If certain product prices are specified in a contract, there is a pricing risk. The benefits of standard form contracts include reduced costs, quick tendering, easy knowledge of contract terms, greater confidence in contract terms, less leeway, and established jurisdiction for future references. Read 4 min The law often depends on the language. Words have certain meanings in contracts, and while your eye may overlook words that sound right, you should be aware that a simple word change can change your legal status.

For example, the use of the word “should” has specific connotations. If a contract says you have to do something, it means you are obliged to perform that action. This is legally binding language. If this word is used in reference to an action you don`t think you should be forced to take, ask for it to be changed to “may.” For more information on standard form construction contracts, call our office at 814-870-7600 or fill out this form on our website. One of the main problems with lawsuits regarding standardized contracts is pricing. If a supplier offers you a standard contract with the prices of the products printed in the text, you could be a victim of price fixing. A standard contract would leave the price blank, subject to negotiation. You may not be able to ask for cheap prices, but you can ask for the addition of a sentence that allows you to renegotiate the price at a later date. Some professional associations have been found guilty of price-fixing by issuing standardized contracts that all suppliers of this association use. If prices are part of standardization, then it is pricing. Despite the advantages of standard construction contracts, they are not suitable for all projects.

Even if it is an appropriate starting point for your project, the terms of the contract may need to be tailored to your particular situation. When considering whether a standard contract is appropriate and which one to use, you should keep in mind that the terms of the contract can promote membership in that business organization in a subtle and less subtle way, as they were developed by business groups. For example, earar documents are widely used and generally balanced documents. However, AEOI contract documents provide an important project role for the project architect, which may or may not match your project delivery system. Similarly, contracts created by the EJCDC provide an important role for a project engineer. The MCO, in collaboration with other organizations, has developed a number of contracts known as ConsensusDocs, which she believes are balanced and do not favour any particular party. If someone offers you a standard contract as part of the business, don`t just sign it. Even if you own a small business, you are no less important than large companies when it comes to legal rights, and these companies review every contract they sign.

You should do the same. Be aware of the disadvantages of so-called standardized contracts so that you can look for problems. For example, the word “should” has some connotation. If a contract says, “You will do something,” it establishes an obligation to perform that action. This is legally binding terminology. If a contract uses the word “hall” in reference to something you prefer not to be required to do, you should change it to “may.” Another example is the condition of resolving a dispute between the parties through arbitration. If you wish to reserve the right to bring an action, you must delete or modify this section of the standard. If you are told that a contract is standard, ask who it is. The word “standard” may seem like a group of lawyers somewhere agreed that this is what a contract should say, but it never is. Standardization could have been carried out by the contracting company. This could be his standard contract. As such, it could favor the business.

You have the right to negotiate your own favorable terms. As soon as you learn that a company has given you a standard contract, read the fine print to find the areas that put you at a disadvantage. You should never sign a standard contract as part of your business without passing it. You may own a small business, but your legal rights are just as important as those of large companies that review each part of the contract before signing. . A standard contract should leave the price to the negotiating partners. While you can`t immediately ask for a cheaper price, you should ask for a determination to renegotiate the price at a later date. Always make it a point of honor to carefully read the entire boilerplate to look for sections you disagree with. Most of the time, the company issuing the contract performs standardization. .