Your Contract or Mine? - Stewart · PDF fileYour Contract or Mine? ... • CCA5 1994...

Your Contract or Mine?The use of standard form construction contracts

Prepared by:David Henley

April 17, 2013

© 2013 Stewart McKelvey. All rights reserved. Not to be copied or used in whole or in part without the express written consent of Stewart McKelvey

CONSTRUCTION CONTRACTS

Typical Standard Form Contracts• Canadian Construction Documents Committee (CCDC)

• Wide range of contracts and subcontracts• Canadian Construction Association (CCA)• Royal Architectural Association of Canada (RAIC)• American Institute of Architects (AIA)( )• Other international forms (FIDIC, ICE, etc.)

© 2013 Stewart McKelvey all rights reserved52 2013 Construction Seminar


Most Common Forms• CCDC2 2008 – Stipulated Price Contract• CCDC3 1998 – Cost Plus Contract

CCDC4 2011 Unit Price Contract• CCDC4 2011 – Unit Price Contract• CCDC5A and 5B 2010 – Construction Management Contracts• CCDC14 2000 – Design Build Stipulated Price Contract

CCA1 2008 Sti l t d P i C t t• CCA1 2008 – Stipulated Price Contract• CCA5 1994 – Construction Management Contract• CCA19 2011 – Stipulated Price Subcontract

C6 S C• RAIC6 – Architectural Services Contract



Why use a Standard Form Contract• Both parties may be familiar with the form.• Can be quicker to negotiate.

• Allows negotiations to begin from a common starting position.g g g p• The terms can be tried and tested – results in a greater degree of

certainty.• Reduced cost at the outsetReduced cost at the outset.

• …but with the wrong contract, it may get you in the end…• The drafters have usually addressed most of the major issues.



Why You Might Not Want to Use a Standard Form Contract• The person who drafted the contract has not considered your

circumstances and has no responsibility to you.• Always consider who drafted the contract While many purport to• Always consider who drafted the contract. While many purport to

be balanced, they can subtly favour constituents of the association who created them.

• The areas addressed in the contract may not be those which are most yrelevant for your project. Your project may not fit the model.

• The administrative procedures in the standard form may be significantly different than those you usually follow.

• Does the standard form address your intended risk allocation?



Key Clauses to ExamineLi i f li bili• Limits of liability

• Indemnities• Environmental• Waiver• Waiver• Insurance• Warranty• Contract Price/fees• Changes• Dispute Resolution

As a minimum, are you satisfied with how the standard form contract addresses each of these? If not, changes are needed.



A Few Examples• Limits of liabilityForm of Contract Contractor Liability Limit

CCDC2/4 Insured matters limited at insurance amounts; uninsured matters limited at the greater of the Contract Price or $2m, to a maximum of $20m; third party claims for injury, death or damage to property have no limit

CCDC5A/5B Insured matters limited at insurance amounts; uninsured matters limited at the Construction Manager’s compensation; third party claims for injury, death or damage to property have no limit

RAIC6 Limited to the level of professional liability insurance (usually $2m)

CCA5 Limited to insurance coverage, without specifying amounts



• Holdbacks, bonuses and liquidated damages• Does the contract address statutory holdback obligations?

• The RAIC6 does not, in spite of the fact that architects have a right to lien the project.

• Are performance holdbacks, bonuses or liquidated damages desirable?

• If so, few standard form contracts have these.



• Changes• The CCDC forms use Change Directives and Change Orders. Is this the

process you want to follow?• A Change Directive is a written instruction prepared by the Consultant• A Change Directive is a written instruction prepared by the Consultant

and signed by the Owner directing the Contractor to proceed with a change in the Work within the general scope of the Contract Documents prior to the Owner and the Contractor agreeing upon adjustments in the Contract Price and the Contract Time.Contract Price and the Contract Time.

• A Change Order is a written amendment to the Contract prepared by the Consultant and signed by the Owner and the Contractor stating their agreement upon:

• a change in the Work;• a change in the Work;• the method of adjustment or the amount of the adjustment in the

Contract Price, if any; and• the extent of the adjustment

i th C t t Ti ifin the Contract Time, if any.



What you should always do when first considering a standard form contractg• Review all of the terms. Do they align with what you want to do and

how you intend to administer the contract?• Become familiar with the procedures• Become familiar with the procedures.• Consider whether there are changes you want to make to the

procedures.• Consider whether there are issues or risks specific to this projectConsider whether there are issues or risks specific to this project

that may not be addressed in the standard form and whether they can be addressed in Supplementary Conditions.

• If so, draft Supplementary Conditions but take care to consider the consequential affects and potential conflicts.



When Supplementary Conditions may be Insufficient (and a tailored contract should be considered)

• High value contracts.• Unusual risks or issues which require significant reallocation of

ibiliti f th i th t d d fresponsibilities from those in the standard form.• Complex structure to the transaction.• A lot of changes can be a good signal (ie. the Supplementary

Conditions are longer than the standard form contract).• If you need to change most of the contract, it is likely not the best

starting point.


These materials are intended to provide brief informational summaries only of legal developments and topics of general interest The materials should not be relied upon as ainterest. The materials should not be relied upon as a substitute for consultation with a lawyer with respect to the reader’s specific circumstances. Each legal or regulatory situation is different and requires review of the relevant factssituation is different and requires review of the relevant facts and applicable law. If you have specific questions related to these materials or their application to you, you are encouraged to consult a member of our firm to discuss your needs for specific legal advice relating to the particular circumstances of your situation. Due to the rapidly changing nature of the law, Stewart McKelvey is not responsible for i f i f f t l l d l tinforming you of future legal developments.


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