You know the moment. You’re reading a contract and come across a provision that stops you in your tracks. ‘This can’t be right, can it? Do they really think I would sign something so one-sided?’ Dealing with unfair provisions is an inevitable part of negotiating construction contracts. However, if you have negotiated contracts long enough, you learn to quickly spot unfair provisions and develop strategies for dealing with them. In this article, you will find my top 5 list of unfair provisions in construction contracts and corresponding negotiation tactics between owners and contractors. I will also provide some tips on how to counter biased provisions to come to a fairer contract.
Before I get into the list, a brief word about what it means to label a contract provision as “unfair”. Webster’s defines unfair as “marked by injustice, partiality, or deception”. Another definition would be any provision that significantly shifts risk away from a party who is in the best position to manage that risk and towards the party who is not. And while both definitions are meaningful guideposts, I will let my own experience serve as a guide and state that this is a list of provisions and tactics that have given me the most heartburn over the years – particularly those that repeatedly come up in construction contracts.
To read the top unfair provisions and strategies for dealing with them from Mike Koger, director and counsel for AIA Contract Documents, click here.