By signing a contract that contains these clauses you can put you and your company at risk. These risks can be limited by negotiating with the contracting party. In some cases, walking away is your best option.

Contracts are for most case a positive form of protection for all parties in a common constructive goal, such as, a construction project. These legal devices help outline the rights and responsibilities of each party that signs.

By signing a written contract you are obligating yourself and your company to the performance of that document. Your signature allows courts to generally enforce the provisions provided those provisions are not beyond applicable contract law allowed in your state or municipality.

Most contractors have little experience being a lawyer and can get caught up into very bad terms by not reviewing a contract thoroughly.

Your proposal or bid must be used to determine the work you have agreed to perform. The terms you set in that proposal need to be incorporated into any contract you are going to sign. For instance, an electrical contractor usually bids work on the "E" plans. If your contract states the "A", "P", "M", "E", "S" plans you could become responsible for work on all such plans. Limit your contract to the work you proposed. Some unscrupulous engineers, architects and owners are placing such clauses in the specifications. For example:

i. Sections 16722 & 15500 of the Project Specifications (excerpts are attached). Section 15500 - 1.02 reads; "THE ENTIRE BUILDING SHALL BE PROTECTED BY A COMPLETE WET SPRINKLER SYSTEM. THE SYSTEM SHALL COMPLY WITH ALL RULES & REQULATIONS OF BODIES HAVING JURISDICTION AND WHERE MODIFICATIONS ARE REQUIRED TO THAT SHOWN ON THE DRAWINGS TO OBTAIN SUCH APPROVALS, AND THAT THEY SHALL BE PROVIDED WITHOUT EXTRA COST TO THE OWNER. THE SPRINKLER SYSTEMS SHOWN ON THE DRAWING IS DIAGRAMATIC. IT IS THE RESPONSIBILITY OF THE FIRE PROTECTION CONTRACTOR TO INSTALL A COMPLETE SYSTEM IN ACCORDANCE WITH NFPA 13 AND ANY REQUIREMENTS AS REQUIRED BY THE LOCAL FIRE MARSHAL"

ii. Section 16722 1.02D & E read: D. THE FIRE ALARM SYSTEM SHALL CONSIST OF ALL NECESSARY HARDWARE EQUIPMENT AND SOFTWARE PROGRAMMING TO PERFORM THE FOLLOWING FUNCTIONS: 1. FIRE ALARM & DETECTION OPERATIONS 2. REMOTE MANUAL & AUTOMATIC CONTROL OF ELEVATORS, ALL SMOKE CONTROL RELATED FAN SYSTEM, DOOR HOLD-OPEN DEVICES, FIRE SUPPRESSION APPLIANCES, REMOTE MONITORING OF SPRINKLER AND OFF PREMISE NOTIFICATION. E. RELATED SECTIONS: THE FOLLOWING SECTIONS CONTAIN REQUIREMENTS THAT RELATE TO THIS SECTION: 1. DIVISION 15 SECTION "FIRE PROTECTION" FOR WATER FLOW, PRESSURE, OR TAMPER SWITCHES CONNECTED TO FIRE ALARM SYSTEM.

This clause eliminates cost to owner and liabilities to the engineer for incomplete drawings. You must qualify your proposal or be prepared to negotiate these clauses out of your contract 1.

These terms are usually harder to find and understand in many situations. This provision can make you party to the terms between the General Contractor and Owner or others. Did you see or read these other contractor documents? You could be accepting terms like:

• A no lien contract (very bad)
• Design responsibility
• Notice provisions
• Payment provisions (This is a bad one)

What can you do?

1. Request a copy of the agreements or contracts and read them thoroughly.
2. Insert language to limit the clause.

If your customer (i.e. GC) agrees to a no lien contract SO HAVE YOU!! That's bad. This clause will remove your only recourse to enforce payment once your work is complete.

Let alone everything else, lien forms can do more damage than anything else in the General Contractors arsenal. There are many types of lien release forms on the market, each requiring careful anyalization. You could sign an initial form and sign away your entire rights even signing away your rights to retainage. There are or should be only two formats you need to be using.

First, the conditional lien waiver.

The conditional lien waiver will limit your lien to only the amount you have NOT repeat NOT been paid.

Second, the final lien waiver:

This form removes all rights to lien and should NEVER NEVER be signed until you have received your final payment in full.

A contingent payment clause will set terms on when you are paid. Two such clauses are "pay when paid" and "pay if paid". The "pay when paid" clause requires you to wait until the GC is paid. This could delay your payment significantly. Most states allow this clause and assume that this means a "reasonable amount of time" while allowing your right to be paid. On the other hand, "pay if paid" forfeits your right to payment if an owner goes bankrupt or just refuses to pay. This clause should be struck out of any contract you intend to sign. There are a few states that have outlawed the "pay if paid" provision such as California and New York, never the less, you should thoroughly review your contract before signing.

Very few contractors understand delay and acceleration and the impacts of cost to the contractor. You have all seen this happen for example - the steel is 6 weeks late but the completion date stands still. On the contractor suddenly has 200 men on the job and expects you to be completed in a day.

Each of these cause additional cost to you to cover additional mobilization, demobilization, more crews, overtime or cost to expedite at a later date. You can even set yourself in more trouble trying to accelerate a job which can result in loss of productivity, high overtime and job accidents. When an employee is hurt or worse this could mean disaster for you, but that's another article.

On the flip side, most GC contracts in the favor of the GC. They with the owner are entitled to liquid damages if you delay or accelerate. Preserve your right to recover your additional expense in the case of scheduling delays or acceleration.

In short, you are expected to protect other parties from your own negligence on errors. Make sure you pay for insurance to cover these rights.

Many of the contracts you will review will have hold harmless clauses but when they ask you to not only hold harmless the G.C. but the owner, design professionals, inspectors, visitors, and on and on, you may be trying to insure risk you and your insurance company are capable of. This kind of risk can leave you in a very uncomfortable position should something occur.

In many states broad forms of hold harmless clauses are unenforceable. Some courts will not support transfer of responsibility for one's own negligence to another party. Never the less, make sure you negotiate or change the clauses to accept only those rights you are able to maintain control over or for which you can provide insurance.

Thanks to AIA (American Institute of Architects) that retainage even exists. The idea is to create an incentive for the contractor to complete punch lists and provide final documentation. Ideally, you want to negotiate no retainage in your contract. Most contractors (G.C's) will not support this so negotiate the smallest amount or percentage you can submit a retainer bill in lue of subjecting each invoice to retainage.

This list is not all inclusive of contract provisions that could cause you and your business harm. These phases (if indorsed by your signature) can cause significant financial harm to your business. Evaluate all provisions very carefully.

Remember:

1. Everything is negotiable.
2. Sometimes it is better to walk away.