Contract drafting and contract negotiation is important. We all know that. No surprises there! But, when it comes to drafting a contract and negotiating terms and conditions, it is important to be fair and reasonable because a contract has to be an equally allocated give and take of risks. A truly one-sided contract is more than often a recipe for disaster because it is unreasonable and written such that the other party is destined to fail.
Ideally, the party best equipped to manage a risk should have responsibility in bearing that risk. Every project is different (different client, price, scope, complexity, project delivery method, etc.) so there are different risk assessment considerations. And, certain risks that you will assume in one contract does not mean you will assume the same risks in another.
For me, when it comes to contract drafting and negotiation, I like to consult with the client to understand the dynamics of the project and risks the client foresees with the project. This helps me appreciate the client’s business objectives relating to the project and the type of risks the client may be willing to fairly and reasonably assume. I also start with a spreadsheet of those key issues prevalent in many construction contracts which may expand based on the client, price, scope, complexity, project delivery method, and other risk assessment issues pertinent to the project. Below is an example of a spreadsheet of owner and contractor considerations with respect to the drafting and negotiation of a prime contract.
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