Many of us have written articles on the most onerous (“Killer”) contract clauses encountered today, including “pay-if-paid,” “no lien” and other unfair provisions. But there has been much less focus on more obscure contract clauses that may not sound so bad – but can be crippling in their own right.
Here are a few that you might have missed:
1. No photos or videos please.
Despite an increasing reliance on technology in the field, we have seen a disturbing trend toward including contract language that prohibits the use of photos/videos without the consent of project participants upstream – who may be uninterested in preserving a record of unsafe or insufficient conditions.
While there may be good reason for such a clause on a security sensitive project, there generally is no good reason to keep a contractor from documenting jobsite conditions, including those that may be adversely impacting contract work. Therefore, we recommend that this clause be deleted, or failing that, compromise language inserted instead stating:
“Notwithstanding the foregoing, contractor is expressly permitted to document the condition of contract work and the jobsite, including any conditions impacting the work.”
2. We will decide whether to arbitrate or litigate with you.
More contracts contain language allowing the party upstream to decide whether your remedy in the event of a dispute is arbitration or litigation. Obviously the person drafting such a clause seeks to use it to their advantage and wants to find a venue less rewarding for you – after the dispute arises. Worse yet, such a provision delays your recovery as the party seeking to enforce it will often take valuable time before informing you of whether they will elect to go to arbitration or to court in your dispute.
3. You will waive your right to jury.
Many contracts contain a clause stating that you waive your right to a jury trial. Juries are often fond of ignoring technical – but unfair – arguments and helping “the little guy” if they believe that person has been abused. Before you waive this fundamental right think about whether you would want a jury of your peers deciding your fate in a “bet the company” case.
4. Indemnify us from your OSHA violations.
Frequently we see a contract clause requiring you to defend and indemnify a party upstream for any fines, penalties or fees associated with your OSHA citation or violation. While such a provision sounds fair to some (“you allegedly caused the problem, right?”), on closer examination this poses a risk that you assume the OSHA problems of the upstream party. For example, that party may experience a multi-person fatality and willful violations on another project that results in huge fines for willful or repeated charges on your project solely because of that party’s track record on other jobs. A decent compromise is to limit this indemnity to what you cause on this job by adding this sentence:
“Notwithstanding the foregoing, Subcontractor shall not be responsible to indemnify Contractor to the extent Contractor is assessed any increased, enhanced or additional fine or penalty that arises out of or relates to Contractor’s prior history, work record, or any Project performance that did not involve any action, inaction or fault of Subcontractor.”
5. In the event of an ambiguity in the documents, provide the best or most.
Rather than saying that the plans control over the specs (or vice versa) in the event of an ambiguity, you are obligated to provide the most (in quantity) or best (in quality) in the event of a sloppy, inconsistent design. This ambiguity could result in a very expensive upgrade for you to pay for through no fault of your own. It is far preferable to list the order of priority in the event of a conflict.
If you stay alert for these risk shifting provisions and educate your customer why you are not prepared to assume these risks, you will increase your chances of success in a competitive construction environment.