Contract Drafting and Negotiation

Introduction 

Congress enacted the Contract Disputes Act of 1978 (CDA)[1] to “provide a fair, balanced, and comprehensive statutory system of legal and administrative remedies in resolving government contract claims.”[2]  But for many involved in public construction projects, the CDA does not always feel like a fair or comprehensive scheme for resolving disputes caused by the acts or omissions of the Government.  In particular, subcontractors and suppliers are barred by principles of sovereign immunity from suing procuring agencies directly where Government representatives impact, delay, or increase the cost of the work.[3]  Because subcontractors and suppliers lack privity with the agency, their recourse for Government interference is limited to “pass-through” or “sponsored” claims, which hinge on the general contractor’s willingness to take up the torch on their behalf.[4] 
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The Illinois Contractor Prompt Payment Act, 815 ILCS 603/1, et seq. (the “Act”) was first enacted in 2007 and designed to safeguard contractors and subcontractors on private projects by providing a mechanism to expedite payments for work performed. The Act applies to all private construction projects in Illinois, except those involving single family residences or multiple family residences with twelve or fewer units in a single building. With the Act, Illinois joined a growing number of states that had enacted similar legislation.

On August 20, 2019, Illinois amended the Act and again joined a growing number of states that are expanding their protections for contractors, this time by restricting the amount of retainage that may be withheld on a construction project. The amendment, codified at 815 ILCS 603/20, imposes a ten percent (10%) cap on the amount of retainage that may be withheld and reduces that cap to five percent (5%) once the project is fifty percent (50%) complete. Specifically, the Act provides:
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Seyfarth Construction Associate Michael Wagner presented the “Construction Site Data Disclaimers: Who Really Carries the Risk?” webinar for Lorman on August 26, 2019, and an on-demand version of the webinar is available. This program presents the owner and the contractor’s perspectives on the risk of differing or concealed site conditions and the role disclaimers of

Developments in virtual reality (VR) and augmented reality (AR) have undoubtedly streamlined traditional design and engineering methods.  With VR technology, users are able to fully imagine themselves in a realistic replication of a physical space (think head-mount displays). AR technology supplements what can be imagined in the actual world by adding computer generated images (think Pokémon Go).  By utilizing software and devices to map physical space in virtual environments, VR and AR technology allows parties to a construction contract to mitigate the risk of design defects and the inevitable claims and litigation that follow them.  VR and AR sectors are predicted to generate $150 billion by 2020.[1]
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On June 17, 2019, from 1:00 to 2:30 p.m. Eastern, David Blake is co-presenting a Strafford webinar entitled: “Construction Management Agreements: Key Provisions Common Areas of Dispute, and Minimizing Performance Risks.” The panel, which includes construction practitioners experienced in negotiating construction management contracts, will focus on best practices for drafting and negotiating these agreements. They

On April 25 and 26, James Newland, partner in Seyfarth’s Construction Practice Group, will be presenting the “Changes and Claims in Government Construction Contracting” course at the Federal Publications Seminar at the Executive Conference and Training Center in Sterling, Virginia. His presentation will focus on owner changes and contractor claims in the federal government contracting

Seyfarth Shaw Construction partner Charles “Chuck” Wall and associate Michael Wagner recently authored a Construction Executive article on how to navigate risk allocation in public-private partnership (P3) agreements. Wall and Wagner focused on P3/concession agreements, design-build contracts, interface agreements, and more. Read “Navigating Risk Allocation in P3 Agreements” from Construction Executive here.

The indemnity clause is one of the most scrutinized, negotiated, and litigated terms of any construction contract. The indemnity clause is a risk-shifting provision that requires the contractor to defend, reimburse, and “hold harmless” the owner and architect from claims and liability “arising out of” the contractor’s work. The indemnity clause is focused on bodily injury and property damage suffered by third parties seeking recompense against the owner. Indemnity clauses share the same core purpose, but can have varying reach, depending on the language used.
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