Water Well Journal
Issue link: http://read.dmtmag.com/i/752472
Twitter @WaterWellJournl WWJ December 2016 23 P arole evidence rule. Liquidated damages. Integration clauses. It sounds like a lot of legalese, but these are terms all groundwater contractors should be familiar with—especially if you frequently work as a subcontractor. "You need to be aware of the laws in the states where you do business," says Michael Kimmel, a partner with Hoy Chrissinger Kimmel Vallas, a law firm specializing in con- struction law in Reno and Las Vegas, Nevada. "If you don't, you could actually be waiving your rights under contract." Here are a few basics of good contracts and what other groundwater contractors are looking for before signing on the dotted line. Types of contracts As a groundwater contractor you're most likely to come across a few different types of construction contracts: ● Traditional contract: An owner designs a project with an architect, then signs a contract with a general contractor who then hires subcontractors to complete the work on the property. ● Engineer-procure-construct (EPC): This type of contract is similar to a traditional contract, except the project is completely engineered rather than designed by an architect. It is then put out for procurement instead of a traditional bid process. These types of contracts are most common in public works projects. ● Design-build: These types of contracts are common when working with homeowners. A homeowner con- tracts you to construct a well on their property but the project is designed as you go. "In my experience, design-build contracts tend to have a ton of problems," Kimmel says. "They often have the most disputes between the homeowner and the contractor because not everybody is starting from the same page." The elements of a good contract Making sure all parties are in agreement is essential to any good contract—regardless of the type of contract or work you're completing. There should always be a "meeting of the minds," Kimmel says. In other words, all of the contract's terms should be clear—not ambiguous—and all of the major aspects of the contract should be dealt with before signing the contract— including price, time, and scope of work. If a court is called on to interpret a contract, they consider the contract as a whole and usually give precedence to spe- cific terms over general terms. Any handwritten terms that contradict typed or preprinted terms also take priority. "In construction contracts, you may have multiple sets of documents," Kimmel says. "You have a contract, you may have a plan, and you may have specifications. In certain circumstances, you may want the specs to take precedence over a more general description somewhere else." That's where a contract clause defining precedence of the contract documents comes in. You can specify the specs take precedence over the plans, for example. It's important to be as specific as possible. That's because the court only looks at the contract—not the negotiations that took place before both parties signed it. "It's called the parole evidence rule," he says. "When you sign the contract, the contract is defined by the four corners of the contract and not what your negotiation says. In most circumstances, you don't get to use emails back and forth to show what the parties really meant in the contract." While it's not common, there are exceptions. To protect yourself, you can add an integration clause, which is intended to exclude any prior dealings, industry practices, or any pre- contract negotiations. Some duties are implied in all contracts. This includes the "duty of good faith and fair dealing," which means you can't interfere with the other party's ability to inform. Owners can breach their duties of good faith by: ● Taking too long to get permits or inspections ● Delaying the issuance of change orders ● Refusing to issue and pay change orders ● Providing late or incomplete review of submittals and requests for information (RFIs) ● Providing the design late. Another duty implied in contracts is the "Spearin doctrine" which says if a contractor is required to build according to plans and specifications prepared by the owner, the contractor won't be responsible for the consequences of defects in plans and specifications. CONTRACTS continues on page 24 (COVER STORY) Learn these contract basics before signing on the dotted line. By Jennifer Strawn