Construction Contract Negotiation and Drafting

Careful construction contract negotiation and drafting is crucial to ensure that the roles, responsibilities and risks are appropriately allocated between the contracting parties so the project gets off on the right foot.

Although each and every provision in a contract is important, there are certain provisions that must be more thoroughly evaluated and tailored to meet the needs of each particular client and each particular project. Some of these provisions include:

• Standard of Care. In drafting the standard of care provision, the parties must consider the standard of care that the design professional, contractor, subcontractor or consultant should be held to. In other words, should that person or entity be held to the standard of a similarly situated design professional or contractor or a higher standard based upon superior knowledge or skill?
• Insurance. In drafting the insurance provisions, the parties must consider the types of insurance coverage that the design professional, contractor, subcontractor or consultant should (or must) have in place for the duration of the project (and after the project’s completion) and what should be the value of that coverage?
• Indemnification. In drafting the indemnification provision, the parties must ensure that the provision complies with Maryland law, which prohibits the indemnification of a party for acts caused by their sole negligence?
• Copyrights and Instruments of Service. In drafting the copyright and instrument of service provisions, the parties must determine when and how the license and ownership of the copyright and instruments of service are transmitted between the parties to the contract during the course of the project. The parties must also determine the extent to which other project participants have a license to use the instruments of service during the course of the project.
• Limitations of Liability. In drafting the limitation of liability provision, the parties must evaluate the extent to which the parties can (or should) limit their liability to the cost of the service performed.
• Consequential Damages. In drafting the consequential damages provision, the parties should determine whether it is in their best interests to agree to a mutual waiver of consequential damages.
• Sustainability. In the new era of “green” building, many owners seek to obtain financial incentives and energy savings, among other things, by incorporating sustainable measures into their projects. In drafting the sustainability provisions, the parties must take the owner’s sustainable objectives into account as well as the other contracting parties’ ability to satisfy those objectives.

The attorneys at Goldberg & Banks have considerable experience in drafting and negotiating both free form and industry form contracts on behalf of all participants in the construction industry, including owners, design professionals, contractors, subcontractors and consultants.

In addition, Howard Goldberg has served as outside legal counsel to the Documents Committee of the American Institute of Architects for the past 25 years. In this role, he has followed changing trends in the construction landscape and helped draft the construction industry documents for design-bid-build and design-build projects. Robin Banks now also serves as outside legal counsel to the Documents Committee.