Kalson Addresses Contract Language Trends, What to Watch For in Today's Market

Richard Kalson, shareholder and attorney for Babst Calland Clements and Zomnir, addressed common contract language trends and recent changes during a seminar at the annual Building Envelope Contractors (BEC) Conference, being held this week in Las Vegas at the Paris Hotel. He addressed a variety of trends from "No Damage for Delay" to "Pay When Paid" clauses that many contract glaziers may see often today.

He described the "No Damage for Delay" clause as follows: "This is often called the 'weasel-out' clause when money actually is owed."

But he cautioned attendees not to take this lightly. "These are generally valid and enforceable and not against public policy," except in certain cases, such as fraud, misrepresentation, gross negligence and bad faith.

Kalson said "Pay if Paid" clauses also are becoming quite popular. In this case, a subcontractor will only be paid if the general contractor is paid by the job owner. "Some states say these are void against public policy," said Kalson. "To have an effective Pay if Paid clause, language must clearly shift the risk to the subcontractor."

"Pay When Paid" clauses are different, however. "[This] is a timing mechanism to govern when a subcontractor is to be paid," advised Kalson. In some cases, he said courts have ruled that this clause doesn't apply when contractors misrepresent the financial status of a project.

One question that came from the audience was how a glazing contractor should handle a contract that requests "impracticable specifications." "Simply 'x' these out and send [the contract back]," suggested Kalson. "To agree right now knowing you're going to fail isn't worth it."

Likewise, another attendee asked, "How do you get a general contractor to alter its boiler plate contract without jeopardizing your ability to get a job?"

"If there are 1,000 pages of documents, take out the four to five things that really matter to you, rather than redlining the whole document," recommended Kalson.

The BEC Conference concludes today.