Besides the obvious description of work, performance, and payments, many contracts also address several other issues. Other issues can include warranties, technical specifications, record keeping, finance charges, insufficient funds for checks, collection, and currency.
Construction contracts also often include information on how additional work will be handled, and whether it will be handled on a competitive bid basis or a time and material basis (T&M basis). Standard labor rates and overtime rates are also often listed as part of the contract. Construction contracts often also address other issues such as health, safety, first aid, supply of material, supply of equipment, restroom and cafeteria facilities for workers, trade licensing, training, work permits, building permits, trade permits, permit fees, Occupational Safety and Health Administration (OSHA) requirements, Mine Safety and Health Administration (MSHA) requirements, responsibilities for designs, responsibilities for engineering and professional engineering stamped drawings (PE stamped drawings), party inspections and/or third party inspections, performance testing, trade inspections, inspections by government regulatory agencies, labor relations, non-employment clauses to highlight that one party is not a W2 employer or 1099 contract employer of the other party’s employees, employment taxes, employment liability, unemployment liability, subcontracting, work hours, site management, project management, project access, coordination between trades, cleanliness and trash removal, hazardous material removal, environmental concerns, and environmental liability exposure.
An autonomy clause may highlight that a contractor is an independent contractor and has independent control over its means and methods. An access clause may contain information on property access for personnel, material, and equipment of a party for performance under a contract. A delays and interference clause may address suspension of work or interference of a party by the other party.
A force majeure clause can be used to address issues outside of a party’s control. Following is a sample Mentch Law force majeure clause:
Contractor shall not be held liable for any failure, breach, or delay arising out a force majeure event. Force majeure events are events outside of the reasonable control of Contractor including war, earthquakes, tornados, floods, severe storms, hurricanes, acts of God, fires, explosions, acts of government, acts of political parties, uprisings, insurrections, sabotage, terrorism, epidemics and embargoes.
It is worthy of mention that the above Attorney Kirk E. Mentch, Esquire / Mentch Law force majeure clause includes reference to epidemics. When Covid 19 or the Coronavirus became widespread early in 2020, there were several publicized issues related to contract performance requirements during the pandemic. No contract / contract client of Attorney Kirk E. Mentch, Esquire / Mentch Law experienced any undefined contractual issues due to pandemic delays.
The Pennsylvania Home Improvement Consumer Protection Act applies to residential contracts and home improvement contractors. Several restrictions are in place for residential contractor contract language. In Pennsylvania, home improvement contractors should complete a home improvement contractor registration application and obtain a home improvement contractor number (PA HIC number), sometimes referred to as a contractor license. PA HIC numbers can be applied for online and are offered through the Commonwealth of Pennsylvania Office of Attorney General.
Contractors should also consider reviewing insurance issues with both their licensed insurance agent and a CPA, including insurance coverages with large contracts. Insurance issues to be considered may include but are not limited to, commercial liability insurance, commercial general liability insurance, umbrella coverages, workers compensation, unemployment insurance, vehicle or automobile insurance, errors and omission insurance (E&O insurance), property insurance, material insurance, and builder’s risk insurance. For construction contracts it can also be valuable to address contract material and equipment, who has title to it and for how long, and when title and the risk of loss transfers if at all. It is also possible for large construction projects that an owner may incorporate an owner controlled insurance program (OCIP) for the project.
Attorney Kirk E. Mentch, Esquire