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What is a construction contract?

Posted By Joshua C. Johnson, Tuesday, January 5, 2016

At its core, construction litigation is contract law. There are, however, many factors that make construction litigation unique and challenging for practitioners who don’t typically handle construction cases. This post will assess one of the most basic questions that a lawyer and client should ask when investigating a construction dispute: what is the contract?

The three elements of a breach of contract cause of action are: a contractual duty, a breach of the duty, and damages. So, the substance of the contract is very important.

Therefore, this list outlines the various components that often comprise a construction contract:

  1. The Contract Documents – This is the term used to refer to all of the documents that together form the parties’ agreement. The agreement sets out the basic terms and is the central agreement between the parties, which generally outlines the contract price and type (e.g., cost-plus or fixed price), the time for performance, and often the payment terms. The basic agreement typically attaches certain exhibits (e.g., general or special conditions, project schedule) and incorporates others by reference (e.g., drawings and specifications).
  2. The General Conditions – This Contract Document sets out the responsibilities of the various parties in the execution of the construction project. On more sophisticated projects, it will define the interplay between the owner, architect, and contractor, as well as any flow down responsibilities for subcontractors.
  3. The Supplemental Conditions – These are special conditions that are unique to the particular project and in some cases, they are used to modify a standardized set of general conditions.
  4. The Specifications – On sophisticated construction project, the specifications (or “specs” as they are often called) provide a detailed explanation of the procedures, materials, dimensions, and minimum quality requirements for the construction project.
  5. The Drawings – The architectural drawings depict visually how the project should be put together. On smaller or less sophisticated projects, the notes on the drawings also add minimum requirements and provide detailed explanations for construction, which are similar to the specifications.
  6. Bilateral Change Orders - The standard document used to formalize an agreed upon change where the parties have agreed on the scope of the change (addition or deletion to the scope of work) and the amount of the change (addition or deletion to the contract amount or contract time).
  7. Unilateral Change Orders - An order from the owner that certain work be performed even if the parties have not agreed on the price for the work or the amount of extra time that is allotted for the project. Some contracts provide specific information describing how to price work performed subject to a unilateral change order.
  8. For State-Funded Public Jobs in Virginia, the Virginia Public Procurement Act (Va. Code 2.2-4300, et seq.) requires that certain provisions be included in Virginia’s public contracts. In addition, there may be other applicable regulations (e.g., VDOT regulations), which are incorporated into contract documents.
  9. The Provisions of the Federal Acquisition Regulations (Chapter 1 of Title 48 of the Code of Federal Regulations) also requires that certain provisions be included in federal public contracts.

This long list of contract documents demonstrates one of the ways that construction litigation is unique and complicated.

Tags:  Construction  Contracts 

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