Avoiding ambiguity should be a primary goal when drafting and negotiating construction contracts. This helps ensure you get what you want, including the bargained-for benefits of the contract. It also promotes smooth contract administration, fulfillment, and expensive legal disputes. Follow these five tips to minimize ambiguities:
1. Keep it simple
Keep your writing simple, clear and concise. Construction contracts are read and interpreted by a wide variety of people. And this includes judges with no knowledge of the construction industry. Using plain English and shorter sentences while avoiding legalese and redundancy will make your contracts easier to read and understand.
2. If it’s part of the agreement, include it in the contract
If a contract appears complete and comprehensive, courts will not allow outside documents to interpret the parties’ intentions. They rely solely on the contract’s written terms. Statements made during pre-bid meetings or negotiations will not be effective in contradicting express terms in the contract. Include all terms of the deal in the contract, or incorporate key documents by reference.
3. Define key terms
Courts give ordinary terms their ordinary meanings and technical terms their technical meanings. The meaning of words depends on context, and parties often disagree on how terms should be interpreted. These differences can lead to disputes. To prevent misunderstandings, capitalize and define key terms to ensure they have a clear, specific meaning. Then use the capitalized term as needed throughout the contract.
4. Include an order-of-precedence clause
Construction contracts consist of multiple documents. Conflicts may arise between requirements in these documents, such as the drawings and specifications. One way to address these conflicts is to include a clause specifying which document takes precedence. For example, the specifications may take precedence over the drawings, or contract documents may follow a set hierarchy. Another useful provision states that any requirement in one contract document is binding as if required by all. These measures help ensure clarity and consistency in contract administration.
5. Make proper use of standard forms
Standard-form agreements such as AIA and ConsensusDocs are commonly used throughout the construction industry. However, using standard-form agreements comes with risks. These forms are often written broadly and may include terms that do not apply to the specific transaction. Additionally, parties sometimes use them without fully reviewing the contents. Even if both parties verbally agree to different terms, written agreements take precedence over oral understandings. Therefore, it is crucial to carefully read all terms before using a standard-form agreement. Add terms you think should be included in the contract and delete terms that are inapplicable.
Yasir Billoo
Yasir Billoo is an attorney whose experience ranges from representing large Fortune 500 companies in complex litigation and appeals in state and federal court, to helping business owners with agreements and legal consulting. Yasir’s litigation experience ranges from complex nursing home defense in nationwide litigation, statewide auto and trucking negligence defense and statewide premises liability defense., complex commercial litigation. Yasir has tried jury and non-jury trials in Florida and other states, including multi-week trials in negligent security defense matters in Florida.
Reach him at intlawpartners.com
