Standard Form Contract Precautions (Part 4)
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Unlike other industries, construction lacks a consistent set of laws like the Uniform Commercial Code or a federal statutory scheme. Contracts produced by professional and trade associations for architects (American Institute of Architects), engineers (Engineers Joint Contract Documents Committee) and commercial contractors (Associated General Contractors of America) can serve as important references and benchmarks when drafting a new contract. They’re a good source of industry best practices, and using them can greatly reduce drafting and review time, meaning lower overall transaction costs for your company.
For all of their advantages, there are several things you should be cautious about when using standard form contracts.
• Standard forms, which are written broadly to encompass many different contexts, require transaction-specific and jurisdiction-specific modifications. For example, certain states require that indemnities be written in a certain way.
• Changes made to one part of the document, such as definitions of words or terms, may affect other parts that make reference to it.
• Custom-drafted and industry-drafted forms are often incompatible. Even industry-drafted forms from different publishers can be incompatible.
• Standard forms always contain the bias of the drafter. Use this bias; know when to use various standard forms published by different industry organizations.
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