Contracts and Claims

Contracts and Claims - 5 Contracts and Claims 5.1 5.2 5.3...

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© 2003 by CRC Press LLC 5 Contracts and Claims 5.1 Introduction 5.2 Contracts Form of Agreement 5.3 Contract Administration Progress Reports • Quality Records • Change Order Records • Correspondence Files • Drawings 5.4 Reasoning with Contracts 5.5 Changes 5.6 Notice Requirements Notice Timing • Form of Notice 5.7 Oral Changes 5.8 Contract Interpretation 5.9 Defective Specifications 5.10 Misrepresentation 5.11 Differing Site Conditions Type I Conditions • Type II Conditions 5.12 Claim Preparation 5.13 Dispute Resolution 5.14 Summary 5.1 Introduction Engineers and architects excel in their mastery of the technical aspects of planning and design, while contractors are highly proficient in identifying cost-effective process to build complex modern structures. However, when evaluated on the basis of their knowledge of contracts, many of these professionals do not understand the importance of the contract language that forms the basis for their relationship with the owner or with each other. Even small contracts have complex contract relationships, due to increased regulation of the environment and safety. Few would argue that the proliferation of contract claims consultants and attorneys reflects positively on the ability of designers and contractors to deliver quality products without litigation. While it is commonly heard that contractors actively seek claims for profit, few reputable contractors would pursue a claim that is frivolous or subjective. Owners and design professionals reflect their heightened awareness of the potential for claims by using restrictive contract language. This section will focus on the basics: elements of contracts, contract administration, interpretation of some key clauses, the common causes of claims, and resolution alternatives. The type of contract is an important indication of how the contracting parties wish to distribute the financial risks in the project. The discussion on interpretation of contracts presents common interpretation practices and is not intended to replace competent legal advice. Good contract administration and interpretation practices are needed to ensure proper execution of the project contract requirements. In the event that circumstances do not Gary R. Smith North Dakota State University
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evolve as anticipated, a claim may be filed to settle disputed accounts. Owners and engineers often view claims as the contractor’s strategy to cover bidding errors or omissions. Those who have successfully litigated a claim are not likely to agree that claims are “profitable” undertakings. A claim is a formalized complaint by the contractor, and the contractor’s right to file for the claim is an important element of contract law. In many situations, court decisions related to unresolved claims help to define new areas of contract interpretation. These disputes often relate to some particularly troublesome clause interpre- tation and serve to provide contract administrators additional guidance on contract interpretation.
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Contracts and Claims - 5 Contracts and Claims 5.1 5.2 5.3...

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