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Q: Contractor's first step ( Answered,   1 Comment )
Subject: Contractor's first step
Category: Reference, Education and News
Asked by: reddie2-ga
List Price: $2.00
Posted: 30 Mar 2005 11:08 PST
Expires: 29 Apr 2005 12:08 PDT
Question ID: 502756
What is the contractor's first step upon receipt of an advanced copy
of the contract?
Subject: Re: Contractor's first step
Answered By: weisstho-ga on 02 Apr 2005 21:10 PST
Hello, Reddie2!

As the comment indicates, some clarification may be helpful, but let
me take a stab -

My suggestions to contractors would encompass the following:

1.  Read the contract carefully. Almost without exception, the party
drafting the contract is going to make the contract terms more
favorable to them than to you. This will be particularly true in areas
like payment (for example - for subs - pay when paid is very common),
indemnification (you are responsible for damages and costs of
litigating if the owner/general is sued and you are somehow involved),
contract termination.

2.  Is there a changes or modifications clause?  How are change orders
handled - never proceed on a change without a written change order.
The contract will ideally state how the changes will be negotiated and
how you will be paid.

3.  Run the contract past your insurance broker. A typical contract
will include the types of risk and coverage limits for which you must
be insured - workers' comp, general liability, auto, etc.  Further,
some of the contract terms, particularly indemnification, may contain
language that takes your actions outside of your insurance coverage -
a quick review by your insurance agent will identify this/these
potential problems and you will probably not be charged for their

4.  If the contract is of any size relative to your capital, consider
running it past an attorney that does construction contract work and
is familiar with lien procedures. This is, in most cases, a one-hour
meeting (max) that will cost you $150-$250 which is a small cost to
protect your reputation and capital.  Have the attorney identify the
pitfalls and, importantly, prioritize the potential changes so that
when you negotiate you know the ones where you hold your position and
the issues that you give on.

5.  Don't be afraid to negotiate. My clients who were initially
hesitant to question the contract of a particularly difficult general
contractor or owner have found - uniformly - that intelligent
discussions and identification of risks are welcomed by the
contracting party.

6.  Don't rely upon some oral modification or "don't worry - we will
work through it."  I think that if you talk to 50 successful and
profitable contractors, you will find 50 people who steadfastly
believe in "getting it in writing."

7.  The gold standard in construction contracts is the American
Institute of Architects. Their website at is a good place to start. Their contract
forms are not inexpensive, but they are worth every penny. There are
other sites too.

Best of luck!!

If there is anything else that you would like to know, please, ask for
a clarification.

And, get it in writing.

Subject: Re: Contractor's first step
From: vballguy-ga on 30 Mar 2005 12:00 PST
Reading the contract?   - Could you give a little more detail?
Is this a test question, or a general question?  
What exactly is an "Advanced copy"?
What type of contractor?

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