Checklist for Reviewing Client Contract Forms

Agreements drafted by legal counsel for your clients are likely to be one-sided. That is how the game is played. Your role is to come up with your own list of desired benefits. The expectation is that the ensuing negotiations will produce a mutually satisfactory meeting of the minds.

Reviewing the writings of your client's counsel is not your greatest challenge. Overreaching is generally obvious, and modifications for the purpose of negotiating key points can easily be drafted. Far less obvious are the missing elements-provisions which would afford you with important protection, but for the fact that they have been omitted. These missing elements are easy to overlook, in no small part because your attention has been neatly diverted to salvaging something workable from what is actually there.

Here is a checklist of reasonable limitations on your risk and responsibility, limitations frequently discarded by your client. You might use this list as a point of reference in your initial review of client contract forms. It is not a substitute for the advice of competent counsel, but it just may assist you in taking important first steps towards a genuine meeting of the minds.

Protecting Your Fee

• Does your agreement provide for an equitable adjustment of fees in the event the project is suspended by the owner and later resumed? Does it provide for a financial penalty for termination at the owner's convenience? Why not?
• What recourse do you have in the event your fees are not paid promptly? Have you given up your lien rights? Do you have the right to stop work without liability for consequential or other damages?
• Does your agreement clearly distinguish between Basic and Additional Services? Is the list delineating Additional Services as complete as you can reasonably make it?
• Has your client listed responsibilities you would normally treat as Additional Services under Basic Services? Have you included the associated costs in your fee?
• Does your agreement include provisions which will enable you to control substitutions? Does it limit the time you will be expected to spend evaluating substitution requests to some reasonable amount?

Estimates of Construction Costs

• Are the limitations on your ability to predict construction costs clearly stated? Do they include mutual recognition that you have no control over the costs of labour, materials, or equipment, over future market conditions, or over the contractor's bidding methods? Does the language make clear that your estimates cannot be guaranteed; that you are not representing that the actual costs of construction will not vary from your estimates or from the owner's budget?
• If your agreement calls for a fixed limit on construction costs, does it allow you to include contingencies, to make minor adjustments in the scope or the quality of the project, to control the selection of materials, equipment, systems, and types of construction? Does it provide for alternate bid items which can be easily deleted, as necessary, to reduce costs?
• What happens if the fixed limit is exceeded by the bids? Is your responsibility for the consequences limited in some reasonable way-to an obligation to redesign, for example? Is the owner required to cooperate in revising the project scope and quality as may be necessary to bring costs into line?
• Is your client seeking greater assurances about construction costs than you can reasonably deliver? Can you provide, instead, that the owner retain an independent cost estimator as a means of securing those additional assurances?

• Does the agreement contain an unequivocal statement of non-responsibility for the means, methods, sequences, techniques, and procedures of construction and for the contractor's safety precautions in connection with the work? Compare with paragraph 4.4 in ACEC 31 and/or clause 2.1.17 in CCAC 6.
• Are your responsibilities in the field clearly spelled out, and are the limitations on your ability to guard against defects and deficiencies in the work clearly stated as they are in ACEC 31 or CCAC 6?
• Does the agreement make clear that you neither control nor supervise the work on the site; that you are not responsible for errors and omissions of the contractor, nor for his or her failure to keep the work on schedule or carry it out in accordance with the contract documents?
• Is your responsibility for reviewing shop drawings, samples, and other contractor submittals limited to those submittals required by the Construction Contract?
• Does your agreement contain a disclaimer of responsibility for the discovery, presence, handling, removal, or disposal of (or the exposure of persons to) hazardous or toxic materials at the site?
• Does the agreement call for the preparation of Record Drawings? If so, does the language make clear that those drawings will be prepared, in part, based on information furnished by others-information which you will not be in a position to verify and for which you cannot and will not be responsible?

• Does your agreement provide for the transfer of ownership of your documents? If so, does it include adequate protection against the consequences of misinterpretation, modification, or misuse by others in the completion of the project? Against reuse on other projects?
• If you are being required to indemnify your client, is your obligation restricted to the consequences of your negligence, at least with respect to your professional performance?
• Is there a clear statement in the agreement that it is for the exclusive benefit of the parties; that it does not create a contractual relationship with or exist for the benefit of any third party-including contractors, subcontractors and their sureties?
• Does the agreement specify that any applicable statutes of limitations begin to run on the date of substantial completion?

Information provided by Encon Group Inc.
http://www.encon.ca/english/lcb/