The developer and general contractor are both from another state and have not previously worked in the city. Over the years, the principals of Acme have become increasingly concerned about safety. A detailed safety training program has been put into place and safety issues are reviewed regularly with employees and project managers. Acme work areas have had very few OSHA citations in recent years.
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The resourceful lawyers at Jimerson Birr have developed a niche in surmounting difficulties through commitment to perfecting the practice of law. The point of client engagement is that pivotal moment where our talented and motivated professionals get an opportunity to act on their ideas and dreams. Importantly, in , the AIA Documents Committee released updated versions of the A family of documents governing the design-bid-build project delivery model. Given the importance of the General Conditions, it is critical for owners, contractors, architects and other construction project participants to understand the key changes in the new A General Conditions so that they understand the effect on their rights and obligations on the project.
This blog is intended to provide a high level overview of certain of the key changes. There are a number of other changes to the AIA A General Conditions, which may be reviewed in detail in publicly available comparison documents at the AIA website.
Section 1. In recognition of the realities of modern electronic communication, Section 1. This allows the parties to establish that email or some other form of electronic transmission can be used for proper notice by specifically indicating it in a fill-in-the-blank provision in each of the Owner-Contractor Agreements.
An important caveat to this is that the new Section 1. Thus, notwithstanding that electronic transmission is acceptable for most types of notices, Notices of Claims can only be made by formal written notice delivered in a manner providing for traditional proof of delivery. Unless changed by agreement of the parties, this is an important and key distinction of which project participants need to be aware to ensure that they timely and properly provide Notices of Claim, particularly in the modern era of largely electronic communication on projects.
Another key point to note about the new Section 1. Therefore, to the extent hand delivery is an acceptable method of notice for the parties, it should be added to this Section 1. Due to the critical importance of technology and digital data in the modern construction industry, the A now expressly requires at Section 1.
The Owner-Contractor and Owner-Architect Agreements except A and B, the short form agreements each require the E to be an exhibit comprising a part of the agreement. The new Section 1. Section 3. The outside time limit for the Contractor to notify the Owner and the Architect of a differing site condition was reduced from 21 days down to 14 days.
The purpose of prompt notice of a differing site condition is to allow the Owner and Architect sufficient time to assess the situation and make decisions as to how to proceed in a timely manner, and this purpose is certainly served by the reduction to the time limit for notice. However, the time limit for the Contractor to give notice was reduced by a third, and the result may be that potentially more meritorious claims may be impeded or barred by timeliness issues due to the shorter deadline.
Contractors will need to be cautious and ready to quickly give notice at the first instance of even a potential for a differing site condition in order to ensure that the ability to make a claim is preserved.
Subcontractors also need to be aware of this change, as the timing requirements of the prime contract are often flowed down to the subcontracts. One of the most substantial changes in the A was to Article 11 related to insurance and bonds. The creation of the Insurance Exhibit is largely a positive development because it addresses the various insurance coverages and limits in significantly more detail than the prior Article 11, and includes prompts for the parties to consider and make choices about a multitude of necessary and potentially necessary coverage lines.
Having these provisions as part of an exhibit, separate from the body of the A, also facilitates the parties being able to provide the Insurance Exhibit to their insurance advisors and brokers for evaluation and completion, as well as to subcontractors to whom the insurance requirements may likely be flowed down to in subcontracts.
The Insurance Exhibit also provides that if the Work involves remodeling an existing structure or constructing an addition to an existing structure, the property insurance must also cover the existing structure against direct physical loss or damage on a replacement cost basis.
The Exhibit provides that the Owner is responsible for all loss not covered because of a deductible or retention.
Other lines, such as professional liability, pollution liability and maritime liability are required to be maintained by the Contractor if the work involves those potential hazards.
Unlike with the prior Article 11 in the A, for most of these different lines, the Insurance Exhibit includes blanks for the parties to fill in with the specific required policy limits per occurrence and in the aggregate for each type of required coverage. The Insurance Exhibit also provides that the Contractor may achieve the required coverage limits for commercial general liability and automobile liability through a combination of primary and excess or umbrella liability coverage.
However, the excess or umbrella liability insurance may not provide narrower coverage than the primary policy, and the excess policy is not permitted to require the exhaustion of the underlying limits only through actual payment by the underlying insurers.
In the A, the Owner had the right to terminate for the Contractor for convenience, but in such case, the Contractor was entitled to receive payment for Work executed, and costs incurred by reason of the termination, along with reasonable overhead and profit on the Work not executed.
A related provision in the A subcontractor agreement entitled subcontractors to the same relief in the case of a termination for convenience. In the A, Section If the parties do not negotiate a termination fee at the time of contract execution, the default would be that the Owner would not have to pay the Contractor anything for lost anticipated overhead and profit. Surprisingly, the AIA did not flow down the language in the prime agreement to the AIA A standard subcontract, so if the flow down language is not aligned, the Contractor could potentially be left obligated to pay its subcontractor overhead and profit on Work not performed without the right to receive the same from the Owner, which is situation to be avoided.
Parties are encouraged to review the Insurance Exhibit in its entirety with their legal counsel and insurance advisor with respect to use of the Insurance Exhibit with any particular project contract. Jackson St. If you are not an existing client of Jimerson Birr, P.
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Ryan Maloney, Esq. Sections 1. Section Insurance and the Insurance Exhibit One of the most substantial changes in the A was to Article 11 related to insurance and bonds. Section Thank you for your interest in Jimerson Birr, P. Please fill out the information below and click on the submit button to send us your comments. Guiding Principles Firm Overview. Professional Development Alternative Fee Arrangements.
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The AIA provisions are compared and contrasted to more restrictive and troubling language sometimes used by general contractors. It should be noted that all sections of the standard form contracts must be drafted in accordance with Arizona statutory and case law, as not all of the standard provisions comply with Arizona law. The Subcontract Sum is based upon the following alternates, if any, which are described in the Subcontract Documents and have been accepted by the Owner and the Contractor. As full compensation for performance of this agreement, the General Contractor GC agrees to pay the Subcontractor Sub in current funds for the satisfactory performance of the Subcontract Work subject to all applicable provisions of this Agreement:. The fixed-price, unit prices or time and material rates and prices are referred to as the Subcontract Amount. Does not entitle an award of punitive damages for breach of the requirements of this provision.
Five Key Changes in the 2017 AIA A201 General Conditions for Construction Contracts
While some provisions in the A are favorable to the Subcontractor, others are not. This multi-part series explores some of the ways a Subcontractor can better: i understand its rights and obligations; and ii allocate contract risks without appearing commercially unreasonable. Article 1 of A contains six sections. Most of the foregoing sections are fairly typical and should not require extensive editing. As context, under A Article 2 more on that Article below , the Subcontractor will: i be bound by the A General Conditions; and ii assume towards the General Contractor all obligations that the Contractor assumes towards the Owner.
AIA Document A401 Agreement Between Contractor and Subcontractor
Compare and Contrast: AIA A401-2007 and ConsensusDOCS 750