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January 2018 Archives

Construction law: The elements of a construction contract

Many construction companies in New York and New Jersey take on multiple projects each year. Upon reaching an agreement for work with another party, it is generally advisable to put the terms of the agreement in writing with a formal written contract. Because construction contracts can be exceedingly complex, contractors should speak with someone with experience in construction law to ensure that all necessary clauses are included. One of the first topics to cover in a Construction Contract pertains to the nature of the work required. Listing a detailed description of the work (i.e., a "Scope of Work") will better ensure that a contractor is not required to perform free work. A clear Scope of Work also makes it easier for a contractor to seek change orders for extra work. Finally, a clear Scope of Work makes it easier to prepare a fair and equitable Schedule of Values so that a contractor can be properly paid for its work as the project progresses. A good Construction Attorney can help with the preparation of a detailed Scope of Work, but it is the contractor that must be prepared to dedicate the time to ensure that the Scope of Work is accurate.

Revise your contract's Mediation Clause

Most Mediation Clauses simply state that the parties to a dispute will use good faith efforts to settle that dispute with mediation. Sometimes the clause will also set forth the person/entity that will act as the mediator (for example, the American Arbitration Association clause). Other clauses state that all binding disputes will be stayed for a period of time while mediation progresses (for example, AIA A201-2017 §15.3.2). However, the most important point that is rarely, if ever, set forth in a Mediation Clause is the requirement that decision makers be required to attend and participate in a mediation. It is true that a good mediator may mandate that decision makers attend the mediation, but why take that chance? Instead, modify your Mediation Clause for each of your projects to list the persons that have decision making responsibilities. Then, just in case that person(s) leaves the project, also list their job title separately as an alternative. Thus, your revised clause will read, "John Doe and/or the Project Executive will be required to attend and participate in all mediation sessions."A good construction lawyer can assist you with drafting a well-written mediation clause that allows claims to be resolved amicably and business relationships to continue.