Beginning with the pandemic and continuing through 2022, contractors learned the hard way how material shortages, labor losses, and rising prices can lead to contractual disputes. Protective contract clauses may protect you. But it’s critical for you and your legal representatives to always push for clarity before contract commitments are signed.
The construction contract is the best means to control risk, such as rising costs, to allow projects to continue without interruption. There are several protective-type clauses which provide protection…
–Construction Business Owner
Construction company protective contract clauses can include:
- Confidentiality clauses – Hahn Loeser of Ohio attorneys say you’ll see more confidentiality protective contract clauses in the future. Agree to “keep your mouth shut,” but that’s only the basic principle. You’ll need to be proactive about enforcing confidentiality among project teams and office support staff.
- Contract reformation – These clarification clauses can solve problems that include pricing adjustments. You can request a rewrite of the portion of the contract that doesn’t reflect your original intent or understanding. However, “valid grounds for contract reformation” are sometimes difficult to prove.
- Escalator clauses – Aka “price-adjustment,” these clauses sanction pricing increases due to rising costs. Some clauses even allow the contract to be canceled.
- Force majeure clauses – These clauses allow you to modify a contract based on unforeseen and unavoidable circumstances. They can sometimes be applied if you don’t have an escalator clause.
- Impossibility clause – Doctrines of impossibility clauses say if you’re unable to fulfill the contract’s stated objectives and it’s impossible to render performance, the contract may be frustrated and not binding.
“If anything is certain, it is that change is certain” could be the official construction project motto. Protective contract clauses are necessary for all contracts and contract owners. You should never agree to a project contract without legal advice.
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