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The indemnity clause seeks to allocate risk
between the parties to the contract. It is basically
the shifting of a loss/potential loss from
one party to another. In the construction setting,
these risks relate to either bodily injury
or property damage, that might occur, which
arises from the scope of work defined by the
contract documents.
4) CGL (Commercial General Liability)
which insures against the risk of bodily
injury and/or property damage; including
completed operations coverage.
5) Builders Risk which insures against damage
to the project or the project materials
while the work is in progress.
6) OCP (Owners and Contractors Protective
Policy) which insures the owner from liability
arising out of the contractor’s operations,
with coverage typically being terminated
once the project is completed.
Construction, even in today’s world, remains
a risky profession. All construction sites, regardless
of their size, present a multitude of
opportunities for accidents, damages and
injuries. There are a variety of insurance policies
which may be purchased, depending on
the risk involved and the policies which have
been identified represent the most common
forms of protection.
7) Safety provisions are incorporated into
or should be incorporated into all contracts.
Similar to the insurance provisions, they help
to protect the contracting parties as well as
clarify responsibilities relating to those who
are performing the work. These provisions
should include that the contractor performing
the work is: i) solely responsible for the
safety of its workers ii) responsibilities include
supervision of the work to ensure the
work performed in an appropriate and safe
manner iii) all safety equipment shall be supplied
iv) comply with all applicable federal
and state laws, OSHA and comparable state
and local safety statutes.
8) Closely related to the safety provisions
in a contract, are provisions which specify
which contractor is ‘in control’ of the
actual performance of the work.
Control is an important issue because it
defines the expertise that a contractor possesses
regarding their scope of work. Each
contractor should be solely responsible for
all decisions regarding the performance of
their scope of work, including how that work
is performed.
9) Request for additional compensation
can only be made for work that has been
pre-approved in writing by the Contractor
or Owner.
During the course of a project, especially a
larger project, it is not unusual that there will
be changes in the scope of work. Requiring a
written Change Order, which will outline and
confirm the change, including any alteration
of the contract price, provides confirmation
for the contractor that the change has been
authorized. Should any questions arise regarding
changes in the work, the contractor
can rely upon the authorization extended by
the Change Order.
V. CONCLUSION
The goal of all construction projects is timely
completion for the agreed upon price. The
project which has a well written contract,
providing clarity for the contracting parties,
is an excellent beginning to a successful relationship
and achieving that goal.
Written by Robert A. Shipley, Principal,
Shipley Law Group, Ltd., Chicago, IL. Construction
Law Specialists. Email: robert.
shipley@shipleylawgroup.com, Phone:
312- 312-527-4545 Website: www.shipleylawgroup.com
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