Procurement Lawyer

Using Form Construction Subcontracts on State & Local Public Projects

by Aaron Silberman
Construction

Construction

Mr. Silberman is a shareholder in the Construction and Government Contracts Practice Groups at Rogers Joseph O’Donnell in San Francisco. He is Immediate Past Chair of the ABA Public Contract Law Section and former co-chair of its Construction Division, Subcontracting Committee, and others.

The construction industry, perhaps more than any other, uses standard form contracts. Organizations like the American Institute of Architects (AIA); ConsensusDocs, a coalition of industry groups; and the Engineers Joint Contract Documents Committee (EJCDC) sell these form contracts to owners, contractors, design professionals, and others, which in turn use them either as-is or, more often, with modifications.

The “family” of contracts sold by these organizations typically includes construction prime contracts and subcontracts, design contracts and subconsultant agreements, design-build contracts, and others. Construction prime contracts and subcontracts are widely used in the industry.

The advantages of using these form contracts are obvious. They provide consistency within an organization. In many instances, their provisions have been time-tested and ambiguities eliminated, or at least mitigated, by appellate court decisions. They are efficient, reducing the need to “reinvent the wheel” for every project. This is especially true where the project participants use multiple contracts from the same “family,” e.g., the owner – prime contractor, prime contractor – subcontractor, owner-designer, designer-subconsultant, and so forth, agreements for the project are all forms from the same organization; when they do that, there is built-in consistency of most, if not all, key contract terms.

They also have some obvious disadvantages. There is a tendency for parties to resist modification or customization of their form contracts and to rely on those forms without examination of whether they are truly in their or the project’s best interest on a particular job. No form contract fits every project and party. Without careful review and modification, these form contracts will not serve the parties’ or the project’s interests. They may be legally unenforceable, in whole or in part. No form contract fits every jurisdiction’s legal and regulatory requirements, and most, if not all, jurisdictions will have some requirements or prohibitions that merit modification of any form contract.

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