Standard Contract Forms

Thanks chiefly to the American Institute of Architects (AIA) the construction industry generally functions with standardized printed contract forms of agreements between the variety of contractors and professionals involved.

The practice of using standardized forms is generally beneficial for the routine types of contractual relationships where there is nothing particularly unique involved. The most significant advantage of using the contract forms lies in the fact that, although changed periodically, many of the provisions have remained substantially the same for a number of years. As a result, published court decisions interpreting those provisions are frequently available if interpretations are needed. Another advantage lies in the fact that experienced contractors, owners and design professionals become familiar with the standard contract terms. They therefore know what to expect. Experience should also teach them what of the standard form provisions may not work satisfactorily, thus allowing them to seek modifications in future contracts.

Before signing any contract the parties should read and attempt to understand the terms and provisions included. The time to question or ask for changes is before, not after, signing. The AIA contract forms warns “This document has important legal consequences; consultation with an attorney is encouraged with respect to its modification Nevertheless’ most parties do not consult their attorneys even through they are aware that in most instances the contract forms were assembled and blanks completed by non-lawyers-usually architects.

If the owner, contractor, subcontractor or design professional involved has had previous construction experience with the same contract forms, there may be no need to consult an attorney in the routine contract situation. The first time out, however, may warrant an attorney’s advice and certainly very careful attention to each and every term of the proposed contract.

If there is anything unusual about the nature of the relationship between the contracting parties, the type of work or services involved, any unique aspect about the means or methods to be used or in the nature of the project, careful attention to contract terms is required. It is frequently discovered, often too late, that unusual aspects had been either overlooked or not properly provided for in the contract language.

It is also important for the parties to make sure that the contract form being used is the one intended for the particular circumstances involved. Similarly, it is important that all of the contract documents be coordinated together. It is not unusual to find AIA standard general conditions and specifications for projects involving construction management agreements. Use of the most current edition available of the contract documents with a full understanding of modifications made from earlier editions is also necessary.

Care must be exercised in understanding what is to be inserted in the blanks of the standard contract forms and to assure both inclusion of necessary terms and uniformity of those terms in all contract documents. For example, payment provision inserted in the owner-contractor agreement should be consistent with the payment provisions in the general conditions language. Otherwise, a dispute may result.

When a party receives the standard contract form proposed for his use, he should certainly read and understand its content. He should also be particularly alert to certain of the standard features common to the source of the forms. For example, most AIA forms contain arbitration as a means of resolving disputes. A party with whom such a contract form is proposed must consider and decide whether he would prefer arbitration of disputes rather than going to court. He should also review the contract form with an eye toward previous experiences with similar forms and any unusual aspects of the particular project involved.

All of the contract documents should be reviewed. It is not unusual to find a substantial number of the printed form general conditions changed by the supplementary general conditions commonly included in the specifications. Language in the specifications or details in the drawing may modify or supplement the terms of other contract documents.

There is a distinction between the standard forms such as those published by the American Institute of Architects and what firms, frequently contractors, have printed up using such titles as “Standard Subcontract Agreement.” The latter can, and often times do, fail to provide a fair balance between the rights of the contracting parties. Unlike the AIA forms which do seek such a fair balance, these special forms used by many concerns may contain provisions slanted in their favor. Certainly, greater caution must be exercised when such a contract form is proposed for use. Just because it says “standard” means nothing.

Cautious use of published commonly-used contract forms by persons engaged in the construction industry and their customers and clients often saves a good deal of time and expense and, yes, perhaps even attorney’s fees.