Mud, dirt, old materials, trash, - a job site can be a messy place, but perhaps the messiest part of construction isn’t the job site, it’s the contract. On construction projects, contractors, subs, owners, and suppliers throw around contract language with more authority than most attorneys and lob contractual missiles across the bow more often than in a WWII South Pacific maritime brawl! While every project should be detailed by the clearest contract language possible, the fact remains, sometimes the letter of the agreement is less important than the spirit of the agreement when it comes to building relationships.
When lawyers get involved, nuances in language can lead to twisted expectations and liabilities, contorting the purpose of the project into a mudslinging contest rather than understanding the essence of what everyone wants – a complete project. Every party leaves any contract dispute thinking they deserve the favorable interpretation of the contract and often times contractors and subs don’t get paid and owners rarely get exactly what they’ve signed on to receive.
It’s safe to say that most contracts are favorable most to the writer of the contract. AIA construction contracts, for instance, tend to favor the owner; in public works projects, supplemental conditions are thrown in on top with things like liquidated damages and other caveats and indemnification that works to the advantage of the public – public money is often considered a ‘privilege’ and contractors are ‘lucky’ to be awarded these projects in the first place. Contractor generated contracts, obviously make ‘outs’ possible such as ambiguous timelines and leniency to choose substitute materials and methods to increase margins.
The Essence Of The Deal
This isn’t to say that these caveats and indemnifications are always meant to operate as swords rather than shields. Save a relative minority, most parties involved in the process aren’t entering into the agreement aggressively, I have to believe that. Overzealous use or enforcement of the contract violates the one thing that allows contractual agreements to exist - Good Faith and Fair Dealing.
You would think that enforcing something as subjective as ‘good faith and fair dealing’ would be difficult, almost impossible when compared to the objective language of a contract but in my experience, it’s the other way around. People naturally know what’s fair and unfair, naturally know what’s good and bad, right and wrong. Ironically, I believe issues tend to get more cloudy when legalities are entered into the mix.
The whole point of lawyers is to argue mitigating circumstances. If contracts and indeed, the law, were black and white, there would be no reason for arbitration in the first place. The reason juries are convened, why arguments are made is because of the multitude of ways to interpret written law. The system is designed to perpetuate this. On the other hand, things like right and wrong and fair or unfair are almost hardwired into our thinking at an almost DNA level.
Do What's Right, Not Just What's Expected
And while expectations should be mapped out in contractual form, it’s important for all parties involved to be inclined to execute the obligations in good faith rather than in the strict confines of contractual language. For example, contractual language may map out equipment requirements on the job site, but neglect to compensate for weather or acts of God. In the event an unexpected storm comes along and creates conditions which make the original equipment requirements obsolete, both the contractor and the owner should be prepared to budge on timelines and rental agreements.
Another example - if a project appears to be ahead of schedule, it would be unfair and, frankly, morally objectionable for the contractor to pad the completion date in order to pad profits. C’mon, you know that’s wrong and unfair - regardless of what your contract says.
Justin Sweet, a professor at University of California, Berkeley wrote a book on contractual law. In fact, his book is used as standard curriculum in many of the best law schools across the country, including DU Law School, here in Colorado. Sweet sums up this concept beautifully, writing, “each party should not only avoid deliberate and willful frustration of the other party’s expectation but should also extend a helping hand where to do so would not be unreasonably burdensome. Contracting parties, although not partners in a legal sense, must recognize the interdependence of contractual relationships.”
Basically, you learned this in kindergarten - when you’re part of a team, you’re part of a team - and a contract is less about detailing penalties and more about fostering relationships. What I’m telling you is, play fair- you’re a builder so building partnerships should come naturally to you.