CONSTRUCTION
I have recently heard about new "ConsensusDOCS" construction contract forms. How do they impact subcontractors?
In September (2007), a broad-based group of prime contractors, subcontractors, public and private owners, sureties, and other industry organizations jointly released a new family of model contract documents called ConsensusDOCS. Twenty leading construction associations, including AGC, ABC, ASA, Construction Owners Association of America (COAA), Construction Users Round Tables (CURT), and National Association of Surety Bond Producers (NASBP), participated their development. The goal was to represent the best interest of the project rather than an individual party, employ best practices, and allocate risk fairly among all parties.
The AGC and COAA will merge their contract documents programs into ConsensusDOCS. Significantly, however, the AIA did not participate in the ConsensusDOCS process and will continue to publish its separate family of documents.
ConsensusDOCS include a new model subcontract form, ConsensusDOCS 750. This document contains several provisions that are "friendly" to subcontractors, including:
- Indemnity limited to damages caused by the subcontractor: The ConsensusDOCS subcontract does not require subcontractors to indemnify the contractor, owner, or architect for all types of claims, but limits the indemnity "to the extent caused by the negligent acts or omissions" of the subcontractor and its subs
- Payment timing and obligation: The sub is entitled to be paid within seven days after the contractor is paid. If the contractor has not received payment from the owner for reasons that are not the sub's fault, the contractor is still obligated to pay the sub within a reasonable time
- Equal retainage amounts: The contractor can retain from the sub only the percentage of the contract amount that the owner retains from the contractor
- Review of plans and specs: The sub's review of the contract documents is only for the purpose of facilitating the work, not to discover errors or omissions, or to verify compliance with laws and codes
- Liquidated damages limited to actual responsibility: The amount of liquidated damages that can be assessed against a subcontractor for project delay is limited to the sub's actual responsibility and may not exceed the amount actually assessed by the owner against the contractor
These are only a few of the more significant provisions in the Consensus-DOCS 750 subcontract form. Only time will tell whether this and the other ConsensusDOCS gain acceptance in the marketplace. For more information, visit (http://www.consensusdocs.org).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
