I often times get called into a project after the contract is signed and the hole is dug. When my client and I discuss the history of the project, we review the contract. I often times learn that they used a form contract, such as an AIA contract, with no modifications. My question for you, “Is this the best way to go?” My answer is “Probably not.”
While form contracts are excellent resources, well thought out and a large body of law for interpretation, they should be carefully reviewed for each project. The contract should be reviewed and modified so that your interests are protected, and for compliance with state law, particularly your state’s Prompt Payment Act.
I recently came across a New York State Bar publication entitled, Commentary to Owner’s Rider to Standard Form Agreement Between Owner and Contractor (AIA Document A-107 – 2007). This is an owner oriented form rider that can be used with AIA Form A107. It was created for real estate attorneys who are not familiar with AIA contracts or negotiating construction contracts.
The rider addresses many practical issues that arise during a construction project, such as whether the owner should be able to have contact with the construction foreman or whether the owner should go through the architect. Because this is an owner oriented rider, the rider allows for direct contact between the owner and foreman, and requires that the foreman’s contact information be provided to the owner.
The rider also supplements the AIA contract on warranties and the time in which the owner may sue. Again, because this is an owner oriented rider, it notes that the one year warranty does not affect or limit the time within which the owner may initiate proceedings for breach of contract or negligence.
AIA or any form contract is a great place to start on a project. But, much as the plans are discussed and modified, so too should the contract. It’s great to start with a form contract, but you will be well served modifying it to fit not only your interest as an owner, general contractor or subcontractor, but also tailored to fit your state’s laws.
Craig, great thoughts. My only caveat would be that these forms are meant to work together as one group and some changes (aside from the example that you provide re. state law, prompt pay, etc) can cause the whole house of cards (or truss system) to fall apart. In short, some riders may work, but others will likely cause the types of conflicts and ambiguities that we attorneys love to fight about.
Thanks for sharing. Of course, taking a form contract and then making so many changes the “form” is no longer recognizable is equally problematic!