New Trends and Bad Results in Construction Contracts, Part I

Abstract

“New Trends and Bad Results in Construction Contracting” reviews some of the more significant changes in construction contracts in the past 10 to 20 years that are the source of many problems between owners and contractors. A few of the issues and clauses covered in Part I include the current state of the construction industry, trends and the reasons for them, force majeure clauses, creative clauses governing the contractor’s schedule, and float jacking. Part II offers a review of a few additional “problem” trends that increasingly appear in the construction industry, including differing site conditions clauses that shift risks to the contractor, consequential damages clauses that could take away the contractor’s profit and more, clauses that promise alternative dispute resolution that instead set up roadblocks and hurdles that delay resolution and increase the cost of settling disputes; and clauses that give away the contractor’s claims and rights to lien the job from the outset. The pressures leading to these trends are primarily economic and have resulted in more risk for the contractor, among other things. This paper discusses areas of increased risk found in today’s construction contracts, the reasons why they have appeared, and what a contractor should do to mitigate these “new” risks.