A construction contract that protects you

With all the things that go into a renovation project – design plans, importing materials, scheduling dates for completion – the last thing you want to do is read through a complicated construction contract. But did you know that the standard form contracts that are often used to reduce drafting time and transaction costs for home renovations generally do not offer owners adequate protection if something goes wrong?

Open to amendment

Standard form contracts, such as those by the Canadian Construction Documents Committee (CCDC) and the International Federation of Consulting Engineers (FIDIC), provide a convenient method for owners, contractors, designers and consultants to get started on a project quickly. These forms cover matters from stipulated price contracts, service contracts between owners and consultants, to rules for mediation and arbitration of disputes. Standard form contracts are well known and understood in the industry, strive towards a balanced allocation of risk, and aim to reduce transaction costs.

However, standard form contracts are rarely used as is. All standard form contracts are open to amendment, to suit the requirements of a project. And the supplementary conditions that are often added by the other party may lead to an off-balance allocation of risk to their benefit. Alterations may also include the omission of important issues such as termination for convenience, key personnel provisions and liquidated damages. All of these affect an owner’s liability and the recourse available to them in the case of a dispute.

Adapt to circumstances

Additionally, different contracts and provisions must be adapted to the particular circumstances of a project. For example, different standard delivery models (more on this in our last issue) align with particular pricing models. Design-builds with clear design parameters lend themselves to stipulated price models that push almost all the risk to contractors. However, additional provisions must be included to limit an owner’s risk. The possibility of extra costs must be addressed in the contract, or the owners run the risk of paying exorbitant costs at the completion of the project.

It is essential that you retain a lawyer who understands construction contracts, project delivery models and common pricing models to ensure you are protected in the best way possible throughout your renovation journey.