May/June 2023 - 101

Part II: Why Review and Negotiate My Subcontract?
The most common excuses made by
subcontractors who fail to properly
negotiate their subcontracts include a lack
of time and a perceived inability to
successfully request that changes be made
to the subcontract. This type of attitude
often leads to hundreds of thousands, and
perhaps millions, of dollars of losses.
To avoid subjecting your company to the
possibility of suffering huge losses, I urge
you to carefully review and negotiate each
subcontract that you enter. A good start to
any contract review includes a careful
focus on the following items:
Indemnification: Many subcontracA
regular column
from the DFI Risk and
Contracts Committee
tors review the indemnification clause
prior to reviewing any other contract
provision. This concern stems from the fact
that many indemnification clauses require
that a subcontractor protect the contractor,
the owner and the project's design professionals
from their own negligence resulting in insured
personal injury or property damage claims or their own
breaches of contract.
MONDAY, JULY 24
Save the Date: Panel on
Project Delivery Risk
DFI's Risk and Contracts Committee has organized a
panel discussion on risk and project delivery
systems to be held at the Geo-Risk 2023 conference,
organized by the American Society of Civil Engineers
Geo-Institute in Arlington, Virginia, July 23-26.
The session is titled " Project Delivery Risk in Deep
Foundations - Legal and Operational Approaches "
and takes place on Monday, July 24, from 11:00 a.m.
to 12:45 p.m. ET.
Information is available at www.geo-risk.org.
Authored by:
Richard Kalson, Esq.,
Benesch Friedlander
and chair of the
Geo-Industry Working
Group
Notice: Many subcontracts now require
that a subcontractor provide notice of a
claim for extra compensation for differing
subsurface site conditions in a very short
time period ranging from one day to three
days after the subcontractor encounters
such a condition. Can your company really
communicate a claim from the field to the
office to your client in 24 hours or over a
weekend? If not, insist upon a notice
provision that allows you to have at least
three but preferably five business days.
Consequential Damages: Consequential,
incidental and indirect damages
should be excluded.
Reasonable Differing Site Conditions
Clause: There should be a reasonable
differing site conditions clause. The
subcontractor should clearly be released
from the burden of unknown conditions.
Standard Type I and Type II differing site
conditions language should be included in the subcontract.
The differing site conditions clause should clearly set forth
the expectations regarding soil conditions, obstructions,
utilities, surveying, underpinning and working platforms.
Schedule: There should be a mutually agreed upon
schedule.
Owner Agreement: To the extent incorporated into the
subcontract, it must be provided so that payment, indemnity,
differing site conditions, delays, liquidated damages,
consequential damages clauses, etc., can be fully considered.
Force Majeure: Reserve additional time and funds for
delays (even those that are foreseeable) such as with the
pandemic and as a result of government orders, supply chain
issues, sickness, lack of labor, etc. These also need to address
civil unrest. None of these items are unforeseeable at this
point so they need to be specifically addressed.
I have prepared a subcontract review checklist that I
distribute at many industry educational presentations. I would
be pleased to provide it to DFI members who contact me at
rkalson@beneschlaw.com and request a copy.
DEEP FOUNDATIONS * MAY/JUNE 2023 * 101
RISK CORNER
http://www.geo-risk.org
May/June 2023

Table of Contents for the Digital Edition of May/June 2023
