Time for a Contract Tune-Up
By: Brian P. Deeb
The years have passed and the grey hairs mount. You’ve been in business too many years to count and you’ve always done things the same way – and why not, it works!! But it is a new millennium and, like it or not, things have changed. It’s time to take out those archaic documents that you’ve been using for the last ten, twenty or thirty years, brush them off and actually read them again – for the first time. Many of the tried and true contract provisions of the past have no applicability to modern construction practice and many are unenforceable. The fact that these forms have been successfully used for years is no excuse to perform a periodic maintenance check on their provisions, to comply with existing laws and to take advantage of the ever evolving court decisions which may limit or expand the applicability of certain contract provisions you may already be using.
There is no greater investment for a provider of construction labor, materials or services than a comprehensive Contract form which clearly sets forth all of the necessary terms and conditions of one’s trade as it applies to a particular project. Once a form is developed, it may be utilized over and over, with only a periodic maintenance check needed for its long term viability.
Some of the many contract provisions which have evolved, and which continue to evolve, include the following:
- The Contingent Payment Clause: The “you get paid only if I get paid” clause is still very much alive and enforceable in Florida but ONLY if very specific language is used. Most older form contracts do NOT contain the correct language.
- Attorney’s Fees: These are not recoverable in a breach of contract action unless clearly provided for in the contract. The attorney’s fee provision should clearly include all trial and appellate levels as well as any arbitration proceedings, if applicable.
- Waiver of Right to Lien: With very few and very limited exceptions, ANY provision purporting to limit, in advance, a person’s right to file a lien is unenforceable in Florida. This provision still exists, however, in many older contract forms and should be modified or removed.
- Conditions of Final Payment: In addition to the “contingent payment clause” the remaining provisions governing final payment need to be clearly and unequivocally spelled out, which most older contract forms fail miserably to accomplish.
- Warranties: Case law continues to evolve regarding warranties, both express and implied, and older contract forms do not accurately reflect the scope of these decisions. The above provisions represent just a few of the subject matters of contract agreements that need to be periodically reviewed and updated. Now it’s your turn – pull out that contract, dust it off – and read it!!! Then…..fix it!!!