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California Construction Contract Writer
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California Construction Contract Writer
CR-9781572182202
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California Construction Contract Writer

Introduction & Select Features:

If You're a California Contractor, You Need to Be Good at Writing Contracts

If you're a California contractor, you need to be good at writing contracts.

That seems elementary. But few construction contractors would consider themselves adept at preparing construction contracts.

That's too bad because there are good reasons and plenty of opportunities to get control of the contract drafting process on your jobs.

Reasons: The party who controls the contract also controls the bottom line. That's accepted wisdom among vendors in nearly all industries. Buy a car or a kitchen appliance or take your car to the mechanic for service and you'll be handed a document (contract) to sign. Vendors aren't dumb. They know from experience that contracts offer protection. What's true for an auto dealer, an appliance retailer or an auto repair shop is just as true for construction contractors. You need the same protection. And the best way to get that protection is with a contract you draft yourself.

Opportunities: Every contractor who enters into a construction agreement has a chance to either draft the document or negotiate terms of that agreement. Relatively few private jobs are done on a take-it-or-leave-it basis on a printed contract form. Most residential, commercial and industrial jobs are done on contracts negotiated between the property owner and the contractor. Many contractors offer to prepare the contract simply because the property owner wouldn't know where to start. On most jobs, the construction contractor starts contract negotiations simply by submitting a written bid. Attaching a proposed contract to that bid makes it easy for your client to say "Yes." Even if not accepted immediately, a contract tendered with the written proposal is likely to become the basis for further negotiation - especially if the contract has a professional appearance and is obviously custom-designed for the job.

Most experienced construction contractors (and every lawyer) will agree: When you work under a contract you drafted, you've got control of the job.

Of course, not every client will be eager to do business based on your contract. Some will offer their own contracts. Others will object to specific terms in the agreement you offer. What then? No problem. That's the way it's supposed to be ¸negotiation. The better you and your client understand the agreement, the less likely there'll be surprises and disputes.

But no matter what objection a client may have to the contract you offer, doing business on your own agreement is the best choice.

Obviously, you've got a major advantage in contract negotiations if you're good at drafting contracts:

  • You can make quick and easy contract revisions,
  • Your printed contract looks highly professional,
  • You're confident the contract complies with state law,
  • You can deliver a contract almost instantly by email, and
  • You deliver the finished contract in a format that can't be easily changed.

And that brings us to the Construction Contract Writer program, which does all of that, and considerably more. California Construction Contract Writer (CCW) is on the disc bound inside the back cover of this book.

CCW is a Little Different

For many years, construction contract forms were sold on paper, usually at a hefty price per page. If a change was needed in the printed form, you had to write between the lines or make notes in the margin or attach a separate sheet. That made for messy contracts and more than a few disputes.

Now that nearly everyone in business has a computer and a word processor (like MS Word or WordPad), it makes more sense to buy construction contracts in digital form, either on disc or by download off the Web. That's Generation II in the development of modem construction contracting practice. It's clearly a step in the right direction. Making changes, additions and deletions in a digital file is easy. But there's still a problem: flexibility. You're going to be stuck with contract clauses that don't really apply. And no stock contract covers even a fraction of the thousands of possibilities that make every construction project unique. Worse, stock contracts seldom explain what each clause means or when it should be used. That's left up to you.

CCW is Generation III

CCW isn't a digital form you change with a word processor - though it includes a word processor. CCW isn't a stock contract in portable document format (PDF) - though CCW output can be either RTF or PDF. CCW is best described as an interview. To write a contract that fits your job precisely, just answer the questions. When you click to answer, CCW adds to your contract (lower center window in Figure 1). An Explainer window (lower right in Figure 1) describes what you need to know before selecting an option. Bias icons and the Contract Bias window (upper right in Figure 1) identify who is favored by each contract clause and by the developed contract as a whole. The Interview Navigator window (left side in Figure 1) makes it easy to move from topic to topic. When the interview is completed, you'll see a string of check marks next to the subjects listed in the Navigator.

  • The interview can be as short or as long as you want.
  • You decide what's covered in the contract and what's omitted.
  • Enter names just once. CCW fills in all the names from then on.

When completed, print two copies of the contract - one for you and one for your client. Deliver the contract with your bid. That makes it easy for your client to say "Yes" and to sign on the dot-

ted line. If changes are needed, simply jump back into CCW to make revisions. You can change your answer to any interview question or even type text directly into the contract. Then print it again.

Whether you're bidding a big commercial project or a simple home repair job, CCW can draft the contract you need. Once you've created the prime contract, use it to clone subcontracts for the same job.

Maybe best of all, you know the contract is legal and enforceable in your state because CCW is written for your state.

*  *  *  *  *  *  *

Where Risk and Contract Bias Collide

You've probably read construction contracts that seem biased - favoring one party over the other. Here's something you may not have considered: Every construction contract has a built-in bias. There's no such thing as a standard construction contract that's fair to everyone and fits every job in all states. For many reasons, a contract like that doesn't exist. It can't. The law in every state is different. The disclosures required vary with the type of work - residential, commercial, industrial, public or private. What's fair in one context may be completely unfair under a different set of circumstances.

Just as bias varies in contracts, risk varies from job to job. The danger zone for every construction contractor is where bias and risk intersect. To understand this point, consider a job with any of the following:

  • An undercapitalized owner, ~ An inexperienced designer,
  • An aggressive building inspector,
  • Demanding specifications,
  • Short deadlines.

A job with any of these characteristics includes obvious risk. By the time you've walked the job site, studied the plans and bid the work, you've probably recognized other risks that should be considered. It's a shame if what you know about risk in the job (the owner, the plans, the work) isn't written into the contract.

You need a construction contract with bias neatly tailored to avoid known risks.

No stock contract, no side agreement, no oral understanding, no unspoken assumption can substitute for explicit contract language covering what could go wrong.

You have a golden opportunity to head off trouble when preparing a contract for any job. Don't fumble that chance by recycling a contract you've used on some other job, or a form found on the Web. Very few contractors draft an agreement that both fits the job and navigates around known problems. A few minutes invested in contract preparation can prevent most of the common disputes that plague construction projects.

Specifics on Contract Bias

You won't see many construction contract forms that admit bias. But be aware that bias is there. Forms promoted by architectural associations tend to protect the architect. Forms promoted by property owner associations favor property owners. That shouldn't be a surprise. Several other trade associations offer stock contracts. None that I've seen come with dozens of options that can shift contract bias to meet job conditions. But tailoring bias to the job is exactly what you need. And that's what CCW does.

In CCW, check the bias icon before responding to any interview question. Figure 2 shows the bias icon legend.

As you respond to interview questions, contract bias accumulates in the Contract Bias window. To see the bias accumulated in your contract, click View on the menu bar. Then click Contract Bias. See Figures 3 and 4.

Key Options in CCW That Bias the Agreement in Favor of the Contractor

Navigator Topic Question Selection
Plans and Contract Documents Does the bid define the job? Yes.
Scope of Work - General Which form of the scope of work clause? Limited form.
Qualifications on Site Conditions What's in the contract on site conditions? Contractor can rely on what the owner says.
Omissions in the Plans What's in the contract on omissions in the plans? Design defects are corrected at owner's cost.
Retainage Basics Will retainage be deducted from payments? No.
Rejected Work - Contractor Rights What can contractor do when work is rejected? Disagreement is handled as a contract dispute.
Changes in the Work Can the owner make changes without consent? Changes require mutual agreement.
Required Changes What should the contract say about changes? Extra work includes changes required by law.
Required Changes What should the contract say about changes? Changes due to a plan defect are extra work.
Required Changes What should the contract say about changes? An error by owner may result in extra charges.
Pricing of Changes How will the price of changes be determined? The normal selling price of contractor.
Options When Pricing Changes What's the charge for extra work? Owner pays if labor or material costs change.
Call-backs What's the call-back period?  The call-back period ends at final completion.
Warranty What warranty does contractor provide? No warranty.
Contractor Claims What should the contract say about claims? Contractor has a claim for any change.
Dispute Resolution Will disputes be resolved by arbitration? Arbitration is required.
Liability for Acts of Subcontractor Is contractor liable for acts of subcontractors? No, contractor will not be liable.
Contractor Claims for Delay Will contractor be compensated for delay? Contractor will be compensated.
Right to Stop Work for Nonpayment What right does contractor have to stop work? Contractor can suspend work for slow payment.
Damages from Suspension of Work Is suspension for nonpayment compensable? Suspension for nonpayment is compensable.
Grounds for Termination On what grounds can contractor terminate? Excessive delay.
Grounds for Termination On what grounds can contractor terminate? Financial uncertainty of owner.
Grounds for Termination On what grounds can contractor terminate? Owner's repeated failure to meet obligations.
Compensation After Termination What costs will contractor recover? The full price less the cost of completion.
Obligations After Termination When is final payment due after termination? Within 30 days after termination.
Completion Is the punch list a final list of defects? Anything not on the punch list is accepted.


Key Options in CCW That Bias the Agreement in Favor of the Property Owner

Navigator Topic Question Selection
Scope of Work - General Which form of the scope of work clause? Broad form.
Representations by Contractor What representations are made by contractor? The contract price covers all job conditions.
Disclaimer by Owner What are the conditions at the job site? Owner disclaims conclusion of contractor.
Employee Relations What's in the contract on employee relations? Owner can discharge employees for cause.
Responsibility for Safety Who's responsible for safety on the job? Owner is not responsible for job site safety.
Rights After Discovery of HazMat Is contractor responsible for HazMat on the job? There will be no adjustment to the contract.
Authority of Representative What tasks can the representative handle? Representative can reject any work completed.
Authority of Representative What tasks can the representative handle? Representative interprets the plans and specs.
Subcontracted Work What's in the contract on approval of subs? Owner may reject any subcontractor.
Differing Site Conditions What's in the contract on differing conditions? No change order for differing site conditions.
Qualifications - Site Conditions What's in the contract on differing conditions? No pay for work abandoned due to conditions.
Omissions in the Plans What's in the contract on omissions in the plans? Ambiguities get resolved in favor of the owner.
Release of Claims by Contractor What's in the contract on release of claims? Final payment releases all contractor claims.
Retainage Basics Will retainage be deducted from payments? Yes.
Grounds for Withholding Payment Which are valid reasons to withhold payment? Persistent deviations from contract documents.
Grounds for Withholding Payment Which are valid reasons to withhold payment? Failure to keep the work on schedule.
Changes in the Work Do changes require mutual agreement? Owner can require changes.
Options When Pricing Changes What's in the contract about pricing changes? Owner can pay the estimated cost of changes.
Right to Payment for Extra Work Does the right to a change order expire? Contractor must assert the right to extra pay.
Defective Work What standard is used to evaluate the work? Any unsatisfactory work can be rejected.
Rejected Work What can owner do about unsatisfactory work? Work can be removed at contractor's expense.
Warranty What's the warranty on labor and materials? Broad form warranty.
Notice of Claim What's in the contract about notices of claim? Notice is required within 5 days of discovery.
Liability for Damage - Owner Bias What's in the contract about liability for loss? Contractor is liable for all damages.
Indemnity Will contractor reimburse owner for losses? Yes.
Payment for Inspections Who's responsible for passing inspections? Contractor bears the cost of corrections.

Every time you answer an interview question that has a bias icon, CCW recalculates the bias and displays the result as a pie chart in the bias pane. Wedges of the bias pie will swing back and forth like a pendulum when you first start answering interview questions. When you've responded to dozens of questions, most movement in the pie chart will be barely perceptible.

In prime contracts, bias will favor either the property owner (orange) or the general contractor (blue). In subcontracts, bias will favor either the general contractor (blue) or the subcontractor (green). The more blue, the more bias favors the general contractor, whether in a prime contract or a subcontract. A pie chart evenly divided means contract bias doesn't favor either party.

Some questions have no bias. For example, questions under the Navigator topic Cover Page don't affect contract bias.

You have better control, more options and extra security when contract bias is in your favor. CCW makes it easy to draft contracts heavily weighted either way. But bending everything your way isn't necessary. A more balanced contract will be accepted sooner and with fewer revisions. Remember the discussion about the collision of bias and risk. If the owner is financially solid and considered easy to work with, bias of clauses on payment terms and liens may be irrelevant. There's no need to weight those clauses heavily toward the contractor. But if the same owner is in a hurry to take up occupancy, pay close attention to bias when dealing with the construction schedule. Another example: Suppose you feel the plans are incomplete and expect many revisions after work starts. Consider bias very carefully when selecting clauses that cover charges for extra work.

How is Bias Assigned?

Accumulated contract bias is a measure of protection provided by the contract. It's a capsule summary of whose interest is protected and to what degree. Some CCW options have a contract bias that's obvious. Indemnification is a perfect example. A contractor who guarantees to reimburse a property owner for any loss on the job is accepting more than usual risk. That's heavy bias. But bias for many CCW options depends on the circumstances. For example, a warranty against structural defects probably has minimal bias when the risk of collapse is very low, such as a well engineered concrete foundation set on stable ground. But if job conditions suggest higher risk of structural failure, the same warranty could bias the contract heavily in favor of the property owner. Be aware that circumstances can affect the bias in any contract clause.

If you agree that contract bias is a function of job conditions, it's possible to make some generalizations.

Heavy bias shifts a significant burden, risk or expense from one party to the other. Heavy bias goes well beyond what the law requires and beyond good professional practice.

Moderate bias is likely to add to the effort, risk or expense carried by one party. But moderate bias also (1) benefits others or (2) is considered good professional practice.

Light bias imposes a minor burden, such as extra paperwork, but adds benefits likely to (1) reduce the risk ofloss, (2) be considered reasonable, or (3) constitute first class work.

Even (neutral) bias imposes benefits and burdens likely to be reciprocal, insignificant or fully compensated.

*  *  *  *  *  *  *

About the 16 Sample Contracts

The California Construction Contract Writer disc in the back of this book will draft an (almost) infinite number of contracts designed to fit (almost) any job. Only 16 of those contracts appear in this book. If you're in a hurry and simply want to copy contract pages out of the book, that works fine. Contracts printed in this book have blank lines where information has to be filled in. To help you decide which contract fits your job, review the one page introduction before each of the 16 contracts.

The same 16 contracts are available on the disc in the back of this book in portable document format (PDF), rich text format (RTF) and Construction Contract Writer format (CCF). To use the PDF contract forms, you'll need Adobe Acrobat, which is free at https://adobe.com. To use the RTF forms, you'll need Microsoft Word or Wordpad, which are included in most versions of Windows. To use the CCF forms, you'll need Construction Contract Writer, which installs from the disc in the back of this book. Once Construction Contract Writer is installed, copy any CCF forms you need from the folder CA Contracts in CCF on the CD to the subbfolder Craftsman/Contracts under Documents on your hard drive.

The 16 contracts on the disc in PDF and RTF formats look like the contracts in this book. They have dotted lines where blanks have to be filled in. The 16 contracts on the disc in CCF format have a zero or null where something has to be filled in, such as the contract price. To find all places where information has to be filled in, just click Continue >> from Cover Page to Done. Along the way, change anything you want. But be sure to save the contract to your computer hard drive when finished making changes.

On the following page, you'll see a list of the 16 contracts printed in this book. To save space, contracts printed in this book don't include a glossary of terms. But every contract you print from the CCW program will include a glossary.

California Construction Contracts
Form Title Bias Type of Contract Length
CA Home Repair I Heavy - Contractor Prime Contract 17 pages
CA Home Repair II Heavy - Owner Prime Contract 22 pages
CA Home Improvement I Moderate - Contractor Prime Contract 25 pages
CA Home Improvement II Moderate - Owner Prime Contract 32 pages
CA Pool Neutral Prime Contract 25 pages
CA Custom Home I Light - Contractor Prime Contract 13 pages
CA Custom Home II Light - Owner Prime Contract 19 pages
CA Commercial Repair Neutral Prime Contract 16 pages
CA Commercial Construction I Li ht - Contractor Prime Contract 32 pages
CA Commercial Construction II Light- Owner Prime Contract 11 pages
CA Tenant Improvements Neutral Prime Contract 12 pages
CA Residential Subcontract I Light - Subcontractor Subcontract 10 pages
CA Residential Subcontract II Light - Contractor Subcontract 17 pages
CA Commercial Subcontract I Light - Subcontractor Subcontract 28 pages
CA Commercial Subcontract II Light - Contractor Subcontract 13 pages
CA Public Works Subcontract Moderate - Contractor Subcontract 30 pages

These contracts comply with the following California law and court decisions:

Business and Professions Code sections 7030 and 7159 (home improvement contracts)
Business and Professions Code section 7108.5 (payment of subcontractors)
Business and Professions Code section 7164 (home construction contracts)
Business and Professions Code section 7191 (arbitration)
Civil Code section 1559 (rights of third parties)
Civil Code section 1671 (liquidated damages)
Civil Code section 1717 (collection of attorney fees)
Civil Code section 1802 (retail installment contracts)
Civil Code section 2782 (indemnity and insurance)
Civil Code section 3260 (payment due dates and retainage)
Civil Code section 3262 (lien rights)
Civil Code section 1797.94 (warranty)
Civil Code Title 7 (warranty)
Code of Civil Procedure section 337.1 (limitation on claims)
Code of Civil Procedure section 410.42 (choice of venue)
Code of Regulations section 872 (checklist and disclosures)
Acoustics, Inc. v. Trepte Construction (change orders)
C. Norman Peterson Co. v. Container Corporation of America (excessive change orders)
Capehart v. Heady (shortening of the statute of limitations)
COAC, Inc. v. Kennedy Engineers (obligations of owner)
Hawley v. Orange County Flood Control District (damages for delay)
E. H. Morrill Co. v. State (disclaimer of site information)
United States v. Spearin (plan defects)
Warner Construction v. Los Angeles (discrepancy between plans and field conditions)
Wm. R. Clarke Corporation v. Safeco (pay when paid)
Zurn Engineers v. State of California (constructive acceleration)
15 United States Code section 1638 (truth in lending)
12 Code of Federal Regulations section 226.15 (right of rescission)

324 pages
8-1/2 x 11 in.

California Construction Contract Writer

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