December 2019 – Law and Civil Engineering

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What to Look For in Your Contracts
by Eugene Bass

In the “honeymoon” stage of any relationship between an client and engineer, there can be some discomfort in insisting on a carefully drawn written contract. There may be the feeling that one party does not trust the other or that one party wants to take advantage of the other. A well written contract is a great benefit to all the parties, however, in that it makes it clear to everyone what will be expected and provides for a course of action where the unexpected occurs.

A common source of problems between clients and engineers is where expectations are not met. The contract is the place where the parties can see their expectations clearly expressed in language that they can all understand. Each party should bear in mind that the other party may not perceive their language in exactly the same way as they do. It is therefore important for each party to know the other party’s level of understanding of what is stated in the contract. The engineer should thoroughly discuss the scope of work and terms of the contract with the client to be sure the client has an accurate understanding. If in doubt, a good rule is to “say what it is and say what it is not.”

Until you are fully comfortable with the language in a contract and understand the meaning and interpretation of the terms, including all of the small print, it is advisable to have the agreement reviewed by your attorney and insurance advisor. There can be requirements in a contract for which there may be no insurance coverage. Those provisions should be known and negotiated out of the contract. If that is not possible, indemnity and hold harmless terms should be sought as well as adjustment in the compensation to account for the added degree of risk involved. The option of not entering into the contract should always be maintained if compensation and terms commensurate with the risks cannot be negotiated.

Contract changes can be a source of conflict with a client where they involve more money. The scope of work definition should be clearly stated so that changes from the original scope can be readily identified. There should also be clear provisions in the contract for adjustment of payment in the event of a scope change.

A review of regularly used contracts is necessary to assure that the engineer is fairly protected. A well written contract can serve as a guide to dealing with unexpected issues that may arise during the performance of the work. A primary objective of the contract is to keep the parties out of court.

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