Fluent Essays

Questions: Think about the various terms you might need in an engineering contract.  What do you think would be the five most important basic terms of a contract and why would you think so? Review the contract clauses examples and rate the clauses as good, bad or ugly (really bad for the engineer).  I have also included the slides from the lecture about contract clauses.CONTRACT CLAUSES FOR PROFESSIONAL ENGINEERING SERVICES JOHN W. TULAC Attorney at Law Copyright 2014, 2020 CONTRACTS AND RISK Risk analysis is the bridge between tort law and contract law Contracts help us prevent, manage, and mitigate risks that we identify and assess Contracts allow us to allocate risks and responsibilities for or consequences of risk Contracts may or may not help us deal with risks that we do not identify and assess CONTRACT CLAUSES How an engineer views a contract Scope of work OK Time of performance OK Price OK Terms and Conditions UGH! Terms and Conditions are important Like accounting principles. What the balance sheet giveth, the footnotes taketh away. So yes, you have to read the whole thing ALL THE TIME! HOW TO READ AND ANALYZE A CONTRACT What is the contract subject matter & purpose? Are the rights and obligations of each party clearly stated? Does the contract clearly detail what each party must do and when each thing must be done? Are risks (and “what ifs”) addressed? Is it reasonably balanced? Do the parties (not just the lawyers) understand it? Use a checklist or outline approach PRECISION COUNTS Remember these two questions? What does it mean to be a design professional? What does it mean to me to be a design professional? Precision versus accuracy in contract language Ambiguities create uncertainty and risk and sometimes opportunity STANDARD OF CARE It’s the law. It doesn’t need to be stated in the contract STANDARD OF CARE It’s the law. It doesn’t need to be stated in the contract Owners will put it in the contract anyhow STANDARD OF CARE It’s the law. It doesn’t need to be stated in the contract Owners will put it in the contract anyhow AND THEY WILL SCREW IT UP!!!!! STANDARD OF CARE It’s better to leave it out It is possible for you to agree by contract to a higher standard of care If it must be in the contract at least make sure it is accurate AVOID! Absolutes Exculpatory clauses (for the owner) Construction contract language Sale of goods language Guarantees or warranties of work Distinguish representations of fact Representations of fact are powerful in contracts DAMAGES Remedy for breach of contract is damages Not specific performance or other equitable relief Measure of damages Compensatory (usual measure) Consequential (beware!) COMPENSATORY DAMAGES General measure of damages Difference between what is promised and what is performed under the contract if performance is less than what is promised Breach of contract Substantial performance Opportunity to cure the breach CONSEQUENTIAL DAMAGES Damages beyond the price of the contract itself Example: penalty on another contract or lost profits Dangerous Must be agreed upon in the contract Generally, must be bargained for in advance Can be hidden in plain view TIME IS OF THE ESSENCE An often included clause, short and “sweet” WHAT DOES IT MEAN? TIME IS OF THE ESSENCE It means time is important As an asideCONTRACT CLAUSES EGR 4050 JOHN W. TULAC Attorney at Law, Professor Emeritus Copyright 2018 ANALYSIS OF THE CLAUSES These are clauses that engineers may encounter in contracts drafted by potential clients Your job is to read each clause and determine whether it is good for you, bad for you, or ugly for you You will need to take your time with some of these clauses; some are not easy to read or understand Welcome to the real world BEST EFFORTS CLAUSE Professional shall use her best efforts in the performance of all her duties under this Agreement for professional services BEST PRACTICES CLAUSE Engineer warrants and represents that it engages at all times in best practices for the performance of its services set forth in this Agreement. MOST FAVORED CLAUSE The price for the services is and will continue to be the lowest price charged by Engineer for the same or substantially similar services. If at any time during the term of this Agreement, Engineer offers or sells the same or substantially similar products to a third party at a lower price than the price set forth herein, Engineer will immediately notify Client and reduce the price for the applicable deliverables to such lower price on any pending and future services. TIME CLAUSES Time is of the essence. Time Clauses Schedule of Services - OK Timeline Exhibit - OK “Deadline” or “Deadlines” - Not OK Description of purpose of schedule, timeline, deadline, etc. Often necessary, but potentially dangerous STANDARD OF CARE CLAUSE THREE SIMPLE INDEMNITY CLAUSES Engineer agrees to hold harmless and indemnify Client from any and all liability, including cost of defense, arising out of performance of the services described herein.   Engineer agrees to hold harmless and indemnify Client from any and all liability, including cost of defense, arising out of Engineer’s negligence, whether it be sole or in concert with others, in connection with performance of the services described herein. Engineer agrees to hold harmless and indemnify Client from and against liability arising out of Engineer’s negligent performance of services. MUTUAL INDEMNITY CLAUSE The Consultant agrees, to the fullest extent permitted by law, to indemnify and hold harmless the Client, its officers, directors and employees (collectively, Client) against all damages, liabilities or costs, including reasonable attorneys’ fees and defense costs, to the extent caused by the Consultants negligent performance of professional services under this Agreement and that of its subconsultants or anyone for whom the Consultant is legally liable. The Client agrees, to the fullest extent permitted by law, to indemnity and hold harmless the Consultant, its officers, directors, employees and subconsultants (collectively, Consultant) against all damages, liabilities or costs, including reasonable attorneys’ fees and defense costs, to the extent caused by the Client’s negligent acts in connection with the Project and the acts