AIA contract

[jcmoretti]

It looks like I have a project to do with a new client and the archy wants an aia contract. I have no idea what to expect but he mentioned things like retension, small deposits, don't worry you'll get paid, and so on. Enough to peak my interest in protecting my own interest.

I searched for threads on here but perhaps I am using the wrong keywords. Any help or direction is appreciated.

-John

[rhaskins]

I never sign AIA contracts or contracts prepared by others. They'll sign my contract or find someone else. I've never seen a contract that someone presented me that did not contain clauses meant to shift someone else's liability to me.

In the "real world" the people who supply goods or services are the ones who supply the contract. Just try using your own contract when renting a car or buying health insurance. There's only one reason people want to force their contract onto you, they're looking to take unfair advantage of you.

This is the part of the show where everybody comes out of the woodwork and says I'm wrong, but not a week goes by where I don't see a contract with clauses such as I will hand over my employees social security numbers or I will pay for the portable toilet on the jobsite.

Also, beware of the retention scheme. If they want to retain 10%, just raise your price by 10% because once the retention period is over, you will have to invest a lot of effort into collecting those funds. At this point, the job was done months ago and they no longer need you, so getting your money may require a lawyer.

[Allan Edwards]

John:

I’ve used the AIA contract before without problems, but I now use my own contract. My contract is much more homebuilder specific, has been successfully litigated, and has language in it required by state law. It deals with issues not even mentioned in the AIA.

A lot of contractors use the AIA, I don’t think it’s a bad contract. I do not do 10% retainage.

Main thing is understand what you are signing, if needed have a construction law attorney review it and advise you.

[JMS BUILDERS]

John:

I’ve used the AIA contract before without problems, but I know use my own contract. My contract is much more homebuilder specific, has been successfully litigated, and has language in it required by state law. It deals with issues not even mentioned in the AIA.

A lot of contractors use the AIA, I don’t think it’s a bad contract. I do not do 10% retainage.

Main thing is understand what you are signing, if needed have a construction law attorney review it and advise you.

same here good advice, The biggest problem I find with the AIA is that you have a significant hold back in the end as well as you are now playing by someone elses rules and liability expectancies. Unless there is alot of trust between both parties or you are extremely familiar with the particular AIA why not do your own where you are in control (to an extent) of the verbage and legalities of what you and your company intend to operate and abide by?

[Lavrans]

Just take the AIA contract to your lawyer & have it explained: what parts are in your interest, what aren't, what the state specific language is that must be included, etc. Then change whatever parts you don't like (there's no reason you have to use it word for word) to make everything closer to what you want to see.

[RichardAIA]

There is nothing in the AIA contracts (there are several AIA contracts - which one are you referring to?) that specifies standard retainage requirements. There is a space to add retainage requirements if you choose to.

I would suggest that you get a copy of the several AIA contracts that might apply and actually read them. Contrary to popular mythology here on this forum, they are pretty balanced contracts, certainly more balanced than a lot of contractors' contracts that I've seen. And as Lavrans says, you do have the ability to modify or add to them.

[rhaskins]

If the AIA contract has been faxed to you for your signature, a popular trick is to create an identical looking contract by copying and pasting the paragraphs but alter them subtly to suit your designs. Instead of you paying penalties, change the wording so the penalties are paid to you, etc.

I've been doing this with one contractor for almost a year and he is totally unaware. Most guys really don't comprehend the language in the original document and they most certainly can't be bothered to audit the contract you sign and return.

Remember, you don't have to be the smartest guy in the world, just smarter than your adversaries.

[Lavrans]

If the AIA contract has been faxed to you for your signature, a popular trick is to create an identical looking contract by copying and pasting the paragraphs but alter them subtly to suit your designs. Instead of you paying penalties, change the wording so the penalties are paid to you, etc.

I've been doing this with one contractor for almost a year and he is totally unaware. Most guys really don't comprehend the language in the original document and they most certainly can't be bothered to audit the contract you sign and return.

Remember, you don't have to be the smartest guy in the world, just smarter than your adversaries.

Boy, you have some problems with that idea. Other than the basic moral problems you have outright ethical problems, many of which are probably actionable.

I don't know the legal language for it, but at the least you have changed something and then misrepresented it as being the same thing that was given to you. The originator of the contract isn't going to peruse the returned document looking for changes unless informed that changes were made. I'll bet the courts would say that the enforceable contract is the original, as it was what was assumed in good faith by the originator to be the signed, returned document.

[rhaskins]

Boy, you have some problems with that idea. Other than the basic moral problems you have outright ethical problems, many of which are probably actionable.

I don't know the legal language for it, but at the least you have changed something and then misrepresented it as being the same thing that was given to you. The originator of the contract isn't going to peruse the returned document looking for changes unless informed that changes were made. I'll bet the courts would say that the enforceable contract is the original, as it was what was assumed in good faith by the originator to be the signed, returned document.

They sent me a contract, I sent back my own contract. Nothing untoward. I doubt that the court would enforce a contract I am not signatory to.

[Lavrans]

They sent me a contract, I sent back my own contract. Nothing untoward. I doubt that the court would enforce a contract I am not signatory to.

Mmmm, I don't think you're getting the point. As you wrote earlier

a popular trick is to create an identical looking contract by copying and pasting the paragraphs but alter them subtly to suit your designs

. That implied to me that you didn't tell anyone you changed the contract, that you altered it, signed it, and sent it back looking for all intensive purposes just like the contract that had been sent to you.

A reasonable person could easily look at that contract, not seeing any obvious changes and not being told that there were any changes, could reasonably assume that you had signed their original contract. I think you could be held to that contract because you had knowledge of the original contract substantial enough to allow you to alter it. The fact that you did alter it and sent it back looking like the original, and not telling anyone of the changes shows an intent to deceive.

It's the reasonable test: why make it look just like the original contract? Why not make the changes in a bold font or another color? Then the other person is informed of the change.

The main reason I think you could be held to the original contract is because you know what the original contract was and had the opportunity to refuse to enter into that contract, but you wanted the job enough to "subtly alter" it in your favor (and presumably at the others deficit) and send it back in the hope that the other person wouldn't carefully review it for changes. It also shows that there was only good faith in one party- which might or might not hold much legal weight, but it would with a jury.

[Harringtonjason]

Rhaskins

What your doing is called fraud. People who do this kind of shady crap give the entire industry a bad name. The proper and correct way to amend a AIA contract would be to include an addendum, changing the contract officially. What you are doing wouldn't stand a chance in hell of standing up in your favor in court.

Jason

[Harringtonjason]

Raskins

You are also liable to make sure porta johns are on your site, no matter what the contract language states. Check out Title 19 of the Code of Federal Regulations or just call OSHA for a site visit.

Jason

[Harringtonjason]

RHaskins

Just read your profile and see you are an electrical contractor, so the Job Toilets does not apply to you. The General Contractor is liable for OSHA compliance. I assume that you are signing a subcontract to a GC, making these changes. I don't have the same feelings about Subs messing with GC's as I do Builders messing with the public.

Something you should consider however is that the G.C. is under an AIA contract and just trying to keep the liability chain intact. This is important so as not to waste excessive money in litigation. We all pay really high insurance premiums. This is excaserbated when lawyers waste money fighting each other for who will pay what part of a construction lawsuit. When you have really durable contracts with the customer, contractor, and subcontractors responsable only for their part, time in litigation is reduced. This saves everyone money.

Jason

[rhaskins]

Rhaskins

What your doing is called fraud. People who do this kind of shady crap give the entire industry a bad name. The proper and correct way to amend a AIA contract would be to include an addendum, changing the contract officially. What you are doing wouldn't stand a chance in hell of standing up in your favor in court.

Jason

LOL. Actually I'm protecting myself from unscrupulous contractors. These contracts contain clauses such as:

1. Electrical contractor shall guard wiring against vandalism and replace any wire stolen or vandalized at his expense.

2. Sub contractor shall provide portable toilet for his employees or general contractor will provide and charge subcontractor.

3. Sub contractor shall provide proof that employees are American citizens.

4. Sub contractor will be back charged for use of trash dumpster.

And so on...

So because I change these clauses "I'm" the fraud! Look, I do an honest job for an honest dollar, it's the general contractors who stay up late at night thinking up abusive contract clauses that are the shady operators.

I hardly think that my practices "give the entire industry a bad name" nor do I consider them shady. I read everything I sign, it's not unreasonable to expect general contractors to read the documents they sign.

It basically boils down to this: The GC is trying to screw me, I take steps to prevent this screwing. For my efforts, I am accused of fraud and worse. Only in America!

[Dick Seibert]

Great post Jason.

Something you should consider however is that the G.C. is under an AIA contract and just trying to keep the liability chain intact.

The AIA contracts are good well-litigated contracts, there are no surprises to litigate, and the subcontractors assume their portions of the 16 CSI Divisions. If there is a breakdown in the system it's the CSI specs, the were pretty good but the CSI seems to have screwed them up. This is a 10 year-old article but it explains the situation well:

Construction documents are legal documents between an owner and contractor. The contractor is bound to deliver the product as described in these documents. The construction documents are the basis of communication of the project requirements and, generally, consist of the construction contract, the project drawings, and specifications (specs). Specs may be incorporated into a Project Manual or directly onto the drawings.

To avoid miscommunication, the vast majority of experienced Architects, Engineers,and Contractors utilize industry standard documentation. For contracts and course-of construction documentation, the primary format used is the American Institute of Architects (AIA); for drawings it is the Uniform Drawing System (UDS); and, for specs the undisputed, nationally recognized format is the Construction Specification Institute’s (CSI) 16-Division MasterFormat, with the 1995 version being the most current. LQA utilizes this format in it’s spreadsheet cost analyses whenever possible. The CSI format provides consistent locations, format & language for specs writers and allow for efficient production & communication. Most budgets also utilize this format, as well as the industry costing services (i.e. RS Means, Marshall Swift, etc.).

The system provides (3) primary layers: the 16 Divisions, or main categories (see page 2), Sections, which provide specific requirements for units of work, and Parts, (Part I - General, Part II - Products & Materials, Part III Installation).

Most specs are not written as original documents, but are assembled from previous jobs, and from master or trade sets of specs. This may cause one or more of the (3) most common problems including:

1) specs that don’t pertain to the project under consideration,
2) wordy, difficult to read specs, and
3) specs contradicting the working drawings.

- T h e 1 6 C S I D i v i s i o n s -
1-General Requirements
2-Site
3-Concrete
4-Masonry
5-Metals
6-Wood & Plastic
7-Thermal & Moisture Protection
8-Doors & Windows
9-Finishes
11-Equipment
12-Furnishings
13-Special Construction
14-Conveying Systems
15-Mechanical
16-Electrical¹

When I'm arbitrating a case and it's based upon an AIA or AGC contract, I follow the contract to the letter, it it's a contractor provided contract I look at it, see multiple legal errors, throw it out and proceed with a quantum meruit analysis. Contractors, and most lay people, think contract language means what it says in plain English, and most contractors think they can put anything they want in a contract, neither of these are true, all they are usually doing is screwing themselves and throwing the advantage to the customer. I've said many times over the years here, always use an industry standard contract, and the AIA is the Industry Standard contract. If you don't like it, don't try to reinvent the wheel, get into another industry which has standards you do like, but don't try to write your own standards which are in all probability legally worthless.


¹ http://inspectnet.net/home/news/arch...0Issue%203.pdf