Use of Appropriate Contracts and Attention to Administration

USE THE APPROPRIATE CONTRACT

A contract should serve the purposes of being a reliable guide to clarify and confirm the intention of the parties. In other words, what the parties intended the bargain to be, as well as stating what their respective rights are.

Choose the type of contract which is suited to the circumstances. Use of a complicated or lengthy Agreement may not be appropriate for relatively small or simple projects.

For example, although commonly used for construction projects, the Canadian Construction Documents Committee (CCDC) forms may not be suitable for relatively small home renovation jobs.  Homeowners may be less sophisticated concerning construction and may not be familiar with or understand the terms and concepts employed in the CCDC forms. Use of a simpler agreement may be more appropriate. The CCDC forms may however be better suited to larger or more complicated projects

Any contract, including the CCDC forms, should be used with care. Customize them to suit the specific circumstances where necessary, as opposed to blindly using contract forms without regard for whether the detailed contents are compatible with the intended objectives of the parties and circumstances of the project.

Even simple contracts for smaller projects such as home renovations may require consideration of the following partial example of important provisions, based on typical circumstances:

1. A DESCRIPTION OF THE WORK AND DOCUMENTS FORMING THE CONTRACT 

2. SPECIFICATION OF THE CONTRACTOR’S RESPONSIBILITIES

Typically, the Contractor:

  1. Arranges for permits on behalf of the Owner;
  2. Schedules inspections;
  3. Has the Work area cleaned and debris removed from the Work Site daily;

3. OWNER’S RESPONSIBILITIES

Typically, the Owner should:

  1. Be available to the Contractor for meetings and discussions in reference to Owner decisions, Owner selections, review and approval of changes related to the Work and Unknown and Unforeseen conditions;
  2. Co-operate with the Contractor as necessary;
  3. Provide a work area free of obstructions and have all belongings removed from the work area before the commencement of Work;
  4. Ensure the exclusion from the work area of:  the Owner, children, other individuals and pets;
  5. Provide necessary security for the Work Site, or Contractor may provide this at Owner’s cost,
  6. Provide necessary electric power and water for the Work or Contractor may provide this at Owner’s cost;
  7. Consider appointing the Contractor as Owner’s agent to satisfy all necessary permits and approvals required from government bodies, agencies or utilities. Further, the Agreement should consider whether the Contractor is authorized to make changes to the Scope of Work to conform with relevant laws and regulations.

4. WORK CHANGE ORDERS

Any work requested or required in addition to or at variance with the scope of work of the contractor or necessary because of Unknown or Unforeseen conditions should usually be deemed to be extra to the agreement and not included in the Contract Price. All changes to the Work should be discussed and agreed upon in writing by the parties in terms of a Work Change Order stating the changes to the Work and associated pricing prior to proceeding. Should such changes be necessary in order to continue or complete the Work and should the Owner neglect or refuse to sign the related Work Change Order, the contract should state how such an impasse may be resolved.

5. INCONVENIENCE

Typically, the Owner accepts that there may be inconveniences from time to time, and the Contractor agrees to keep such inconveniences to a reasonable minimum. It should normally be the responsibility of the Owner to take reasonable steps to provide a work area free of obstructions and to remove or protect items in areas where it may be anticipated that they may be subject to dust, vibration or damage. The Owner should also acknowledge that the Contractor may have a waste bin on the Work Site.

6. SAFETY AND ACCESS TO THE WORK SITE

The contract should state who has the responsibility for safety and spell out rights of access to the Work Site.

7. WARRANTY

The length and details of the Contractor’s warranty as well as its limitations should be precisely stated. Also, procedure for warranty claims by the Owner should be included.

8. DELAYS

Timing of Work, commencement and Substantial Performance, (or completion, as applicable), may be specified as being firm dates or estimates only and whether they are subject to any changes to Work or for reasons beyond the Contractor’s control. In the event of the occurrence of an Excusable Delay, the Owner should grant the appropriate extension(s) to cover such periods of delay.

Failure of the Owner to provide timely decisions within the Owner’s responsibility and to co-operate with the Contractor may affect timing as well as financial consequences, (ie. failure to make final decision on finish materials may impact on the availability and cost of contracted sub-trades), for which the Owner should accept responsibility.

The Contractor should consider limiting or excluding liability for damages or losses of the Owner or any other party arising from delays.

9. DISPUTES / TERMINATION

Where there is a dispute between the Owner and the Contractor with respect to the performance of the Agreement, the contract should consider whether the parties are required to attempt to resolve the issue directly and if mutually agreed, use mediation and/or arbitration services to help resolve the dispute.

Furthermore, the contract should deal with the circumstances in which the Contractor may cease work and when the Contractor or Owner may terminate the Agreement together with the resulting legal issues.

In summary, be sure to address all of the important issues, including the foregoing, in a manner consistent with the intention and objectives of the parties.

BE PREPARED FOR ADMINISTRATION

Before you enter into an agreement ensure that you can administer the contract for the sake of

  • customer satisfaction; and,
  • protection of your rights

Determine whether your organization will be able to prepare the documents and monitor the project as required by the terms of the Agreement.

This Article is not legal advice, nor is it intended to be. Please consult a lawyer for advice about your individual situation.

Frank Feldman, B.A., LL.B.

Barrister & Solicitor

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