A few things business owners should know before they ink a construction contract...
When businesses expand, either with renovations or new construction, they will inevitably have to deal with contractors. However, vetting the contractors thoroughly and making sure you are able to get along and communicate with the contractor is important for many reasons, not the least of which is the “coordination and cooperation” clause that might be found – or implied - in your construction contract.
A “coordination and cooperation” clause essentially obligates both parties, the property owner and the general contractor, to do as much as they can to prevent anything that might hinder, prevent or delay the construction project. The coordination and cooperation clause was originally put into contracts to prevent property owners from abusing or undervaluing a construction company’s work; and courts have supported contractors’ rights to work efficiently and without delay. As such, here are a few things business owners should know before they ink a construction contract.
The implied expectation to "coordinate and "cooperate" is just as important as any express contractual provision.
When confronted with disputes which implicate a coordination and cooperation clause, courts have not been kind to businesses/owners who complain about the fine print. In fact, even if the words “coordination and cooperation” do not appear anywhere in a construction contract, courts have found this type of clause to be present, if not implied, in construction contracts. A general contractor is required to finish its construction work in a timely manner, showing up when scheduled and being prepared to work, while the property owner needs to provide easy access to the site as well as a reasonable and agreed upon timeframe for completion of the project, and must be able to be reached easily if there is a problem. Whether the contract says so or not, an expanding business should assume it has a duty to coordinate and cooperate with the general contractor.
Having a "No Damage for Delay" clause doesn't always save you.
When entering into construction contracts with general contractors, expanding businesses frequently try to include a “No Damage for Delay” clause into the contracts in an effort to avoid liability for various construction delays (e.g., natural disasters, unforeseen financial issues, unnecessary red tape) that might cause a contractor to lose money. While every expanding business should probably seek to include this clause in the contract, businesses that lean too hard on the provision – when they have dragged their feet or unnecessarily delayed the project – have frequently met their match in court. Courts will not per se let the owner/business hide completely behind a “No Damage for Delay” clause if the owner has acted unreasonably and/or tried to use the clause as an impenetrable shield.
For additional information regarding litigation and construction law in Iowa, contact the Goosmann Law Firm online or (855) 909-4442.