CONSTRUCTION CONTRACT LAW BIAS ON YOUR WAY

           Tilt Contract Bias Your Way

You've probably read construction contracts that seem biased – favoring one party over the other. Exactly right: Every construction contract has a built-in bias. There's no such thing as a standard construction contract that's fair to everyone and fits every job in all states. For many reasons, a contract like that doesn't exist. It can't. The law in every state is different. The disclosures required vary with the type of work – residential, commercial, industrial, public or private. What's fair in one context may be completely unfair under a different set of circumstances.

Just as bias varies in contracts, risk varies from job to job. The danger point for every construction contractor is when bias and risk intersect. An experienced construction contractor recognizes risk in a job with:

• An undercapitalized owner,
• An inexperienced designer,
• An aggressive building inspector,
• Demanding specifications,
• Short deadlines.

A job with any of these characteristics includes obvious risk. By the time you've walked the job site, studied the plans and bid the work, you probably recognize other risks that should be considered. It's a shame if what you know about risk in the job (the owner, the plans, the work) isn't written into the contract.

You need a construction contract with bias neatly tailored to avoid known risks.

No stock contract, no side agreement, no oral understanding, no tacit assumption can substitute for explicit contract language covering what could go wrong.

You have an opportunity to head off trouble when preparing a contract for any job. Don't fumble that chance by recycling a contract used on some other job or a form found on the Web. Draft an agreement that both fits the job and navigates around known problems. A few minutes invested in contract preparation can prevent most of the common disputes that plague construction projects.

Specifics on Contract Bias

In Construction Contract Writer, check the bias icon before responding to any interview question.

As you respond to interview questions, contract bias accumulates in the Contract Bias window. To see the bias accumulated in your contract, click View on the menu bar. Then click Contract Bias.

Bias in a Prime Contract

Every time you answer an interview question that has a bias icon, Construction Contract Writer recalculates the bias and displays the result as a pie chart in the Contract Bias window. Wedges of the bias pie will swing back and forth like a pendulum when you first start answering interview questions. When you've responded to dozens of questions, most movement in the pie chart will be barely perceptible.

Bias in a Subcontract

In prime contracts, bias will favor either the property owner (gold) or the general contractor (blue). In subcontracts, bias will favor either the general contractor (blue) or the subcontractor (green). The more blue, the more bias favors the general contractor, whether in a prime contract or a subcontract. A pie chart evenly divided means contract bias doesn't favor either party.

You have better control, more options and extra security when contract bias is in your favor. Construction Contract Writer makes it easy to draft contracts heavily weighted either way. But bending everything your way isn't necessary. A more balanced contract will be accepted sooner and with fewer revisions. If the owner is financially solid and considered easy to work with, bias of clauses on payment terms and liens may be irrelevant. There's no need to weight those clauses heavily toward the contractor. But if the same owner is in a hurry to take up occupancy, pay close attention to bias when dealing with the construction schedule. Another example: Suppose you feel the plans are incomplete and expect many revisions after work starts? Consider bias very carefully when selecting clauses that cover charges for extra work.