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Showing posts from January, 2017

The Paper Trail

Twenty years ago, a roofer could complete a construction project with a handshake and an invoice. Getting payment from customers has always been an issue, but the need for contracts and written documents was not as important as it is today. Owners have become litigation and insurance savvy and know how to take advantage of an unprepared contractor. If a problematic project results in litigation, nine times out of 10 the party with the best “paper” will win the day. In other words, the party that has the most detailed and descriptive paper trail supporting its side will more than likely succeed in court. A contractor, subcontractor, or supplier’s first line of defense to claims on a construction project is always the contract. The contract contains pertinent provisions that a party may use to pursue and defend potential claims. Although it is often difficult to negotiate the terms of a contract, to the extent possible, a contractor, subcontractor, or supplier should be aware of provis…

The Escalating Cost of Construction and Combating Price Increases

How can a roofing contractor protect itself from labor and material price increases on a project? The roofing contractor should first consider the payment method on a project. The ideal way to combat a cost increase is to perform the project on a cost plus basis. In other words, the roofing contractor’s payment is based on the actual cost plus a certain amount for profit and overhead. Although this payment method may be preferable, it is often difficult to obtain cost plus contracts given the desire for owners and prime contractors to have a fixed price. Accordingly, the roofing contractor should consider adding additional terms to its contract to protect it from labor and material price increases. The roofing contractor’s contract should include a price acceleration clause which consists of the following: If there is an increase in the actual cost of the labor or materials charged to the Contractor in excess of 5% subsequent to making this Agreement, the price set forth in this Agreeme…

Liquidated Damages Provisions in a Construction Contract

Liquidated damages are a fact of life in modern construction contracting. However, even if your contract contains a liquidated damages provision and the owner has assessed liquidated damages, that does not mean the assessment is valid or enforceable. There are a number of ways you might be able to prevent an owner from keeping contract proceeds that are rightfully yours. This article will provide the reader with an idea or two that will help keep hard-earned contract proceeds in the contractor’s pocket. In a breach of contract situation, liquidated damages are designed to provide a means to compensate the non-breaching party when the actual damages are not readily ascertainable. In other words, when the non-breaching party’s actual damages will be difficult to determine in the event of a breach, then the parties are allowed to stipulate in their contract that a set sum of money will be paid in lieu of having to prove up the actual damages. In construction contracts, the liquidated damag…