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Contract cheat sheet critical at the outset of a project

Angela Gismondi
Contract cheat sheet critical at the outset of a project

A contract cheat sheet can help a project get off to a good start.

“This really is one of the first things I think at the start of a project or when you enter into your contract that is a good idea to know,” said Jeff Scorgie, partner, WeirFoulds LLP.

“We have called it a contract cheat sheet but it’s essentially just an easy-to-use, accessible document or chart that tells you what you need to know about the key aspects of your contract with the relevant section numbers.

“The purpose of it is really so you can easily pull it up, scan through it on an as-needed basis throughout the contract, as opposed to trying to dredge up the entire executed PDF form of the contract with all its attachments.

“Doing this in advance is much easier just so you have it in a single document, you can just pull it up on the fly.”

WeirFoulds LLP held a webinar billed The First Three Months of a Construction Contract on April 6 as part of its Tools for Success series.

The cheat sheet is useful regardless of who you are on a project or what kind of contract it is.

“If you’re a signatory to a contract it’s useful,” Scorgie noted. “It will be larger and smaller depending on the nature of your contract.

“It does apply, in my view, regardless of the type of contract.”

He named 10 potential items to be included in the contract cheat sheet, starting with the process and time limits for changes, claims, time extensions and RFIs.

Notice provisions and default provisions are also important to include.

“Most contracts say that in order for a notice to be effective it has to be delivered to a certain person or a certain address, a certain email address, so include a line item for that,” Scorgie stated.

“If you’re put in default or you have to put the other party in default for a breach of contract what are the steps that have to happen?”

Limitation periods are also key.

“Most contracts nowadays will have or may have some sort of waiver or limitation period built into them,” said Scorgie.

“For example, a contract may say, ‘As of the date you submit your final application for payment you waive all claims against the owner except for the claims that you’ve already submitted in writing.’ Again, that’s something you’re going to want to pull out in advance and have ready.”

It’s also good to have proper invoice requirements and payment terms handy, especially since these are relatively new for Ontario.

“Many contracts now have additional requirements that you have to include in your invoices…You really want to make sure that all of your invoices are compliant,” Scorgie noted.

Along with that are the forms that need to be submitted under the Construction Act and any non-standard terms that are unique about the contract.

Bree Krul, manager of commercial risk with PCL Constructors Canada Inc., said everyone who is a signatory needs to know the contract.

“The bottom line is know your contract and have a transparent conversation at the beginning of the contract. I find it’s helpful throughout the build,” said Krul. “If you don’t know your contract then you are not going to have a fulsome understanding of the different requirements.

“During the tender process you negotiate with the owner or with the general or with the subtrades, but this is the time that now that the contract has been signed everyone is obligated to what is written in black and white.

“This is the time to have the discussions and the come-to-Jesus talks while the relationship is still good.

“It’s new, everyone is happy go lucky with each other, everyone is excited to start this contract, this project.”

It’s also helpful if members of the support team like the contract managers and project accountants know their counterpart with the owner or sub, she noted.

“If there is an issue they can reach out to that other individual, garner a relationship so that it’s easier to discuss potential issues,” she said.

“When the project team gets…into the contractual disputes or payment disputes that’s when I see the degradation of the relationship start to happen.

“If we let our project teams just build and maintain the building and the relationship with their counterparts onsite, boots on the ground, let the support team at head office or wherever deal with the other non-building issues. I find that can really maintain a relationship between the parties.”

Follow the author on Twitter @DCN_Angela

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