Anderson Carmen Third in a series of articles addressing 10 key provisions in construction contracts. Time may be an important element in any contract, but is particularly so in dating stipulation contracts. When is dating stipulation to begin, when is it supposed to end, and under what circumstances may the time for performance be extended? In a construction contract, the concept of time is not the mere elapse of time from execution of the contract itself — rather, it is the period for performance of the construction obligations.
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These and other time provisions found in industry resources, such as those produced by the American Institute of Architects and ConsensusDocsshould be considered for inclusion in contracts otherwise drafted. Is the date that a contract is signed the point from which the time for performance should start to run?
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That may be fine if everything and everyone are ready to go. Have permits been received so that work on site may start?
A contractor may not want the time to start running before it is in a position to actually begin work. Three potential options for the date of commencement of work, according to Section 3.
Owner issues, such as site access and project financing requirements, could make the contract execution date inappropriate as the commencement of the dating stipulation for performance — in such circumstances, a notice to proceed from the owner may be suitable.
The third alternative datings stipulation the parties to draft commencement language that suits their circumstances, which could be: A specified number of days from execution of the contract, selected to allow time for mobilization or other events or that for one reason or another need to occur before work can begin.
A description of commencement tied to receipt of a permit e. While a contractor may actually be doing some contract tasks, such as mobilizing, ordering materials, entering into subcontracts, etc.
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Completion in a Construction Contract The dating stipulation for the completion of work is typically described through a number of days or weeks from commencement, or by a specified date. The time for completion does not typically mean the end of all work, but rather the point of substantial completion.
What will constitute substantial completion needs to be expressed in the contract. Parties and their lawyers may seek to define substantial completion with more objective specificity, such as by making the issuance of a certificate of occupancy a condition precedent to substantial completion.
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There should be clarifying language for these types of circumstances. Ascertaining the date of substantial completion is important.
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Warranties required by the contract documents typically begin on this date. Additionally, the date of substantial completion has financial consequences.
It is fairly standard that a contractor is paid retainage, less a sum for outstanding punch dating stipulation items, upon substantial completion. Liquidated damages are a contractually stipulated amount the parties agree in advance will serve as damages for untimely completion of work and usually take the form of a specified daily amount that accrues for each day of work that continues past the contractually required completion date.
Legally, liquidation damages must not be deemed to be a penalty, but rather a good faith estimate of actual damages.
Negotiation strategies include: Establishing a grace period i. Extensions of Time in Construction Contracts Before a contractor or owner approaches legal counsel to draft or review a construction contract, a construction schedule has likely been developed, which naturally will be a factor in setting commencement and completion terms.
The better the schedule, the better the contract terms. However, because the schedule is based on assumptions, future events, and many factors which may not turn out as anticipatedthe contract should provide for extensions of the completion time.
The primary point is for the contract to acknowledge that events may occur outside the reasonable control of the contractor, and that this should result in extensions of time for completion. This may include: Acts of the owner or architect, Acts of a separate contractor retained by the dating stipulation, Change orders, Adverse weather conditions, or Other causes, such as certain unanticipated labor or material delays, and unexpected governmental delays.
The subject of weather delays may receive its own negotiated provisions, taking into account weather-included delays in the schedule, historical weather averages for the project location, how weather events will be measured and documented, the impact of weather events precipitation, temperature, etc.
Contractors may seek to negotiate an increase in the contract sum by a daily amount of general conditions cost that will apply to any extensions of the contract time.