Insurance and Construction Contract Terms (Part 3)
Some contracts will contain minimum bodily injury and property damage liability coverage amounts that the party must possess and also may require that the customer is added as an additional insured on those coverages.
Prior to consenting to any contract, it’s prudent to examine insurance coverage against the amount of liability exposure in a particular contract.
Contract Terms and Conditions
Governing Law & Jurisdiction – Look at the governing law provision to make sure you’re comfortable with the implications of the state law chosen by the drafter. This can impact the interpretation of the contract from warranties to indemnification.
Additionally, when specific statutes or regulations are referenced in the body of a contract, it’s as though that statute or regulation is wholly contained within the contract itself. It’s vital to read and understand the language prior to giving your consent. This happens regularly in government contracting situations.
Dispute Resolution – This is another clause where you must be comfortable with the laws of the state or forum chosen by the drafter. The rules chosen to govern dispute resolution can impact the outcome. Additionally, you should consider whether dispute resolution is right for your situation.
Intellectual Property – When you’re disclosing and/or licensing your company’s intellectual property, be it trademarks, copyrights or patents, it’s important to include a clause that recognizes the owner of such intellectual property and affirmatively states the agreement doesn’t transfer any rights.
Standard of Care – A standard of care clause may appear in certain types of contracts. The standard of care that’s provided by the law should provide the minimum standard of care for the provision of services under the contract.
Term/Termination – The contract should provide both parties with the right to terminate the contract. The situations in which termination is allowed will vary from contract to contract. Some contracts will allow the right to terminate in cases of dissatisfaction; others will allow it with a specific notice, for no cause. It’s important to contemplate in what cases you would want the right to terminate the contract. There should also be language defining the term of the contract. Does it have a finite term? Does it automatically renew each period?
Right to Cure – Related to termination, some contracts will contain a right to cure clause. This would give the defaulting party notice of a breach and a finite period of time in which to remedy such breach.
- Part 1: The Scoop on Construction Contracts
- Part 2: Damages, Limits of Liability and Indemnification in Construction Contracts
- Stay tuned for Part 4: Standard Form Contract Precautions
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