Contract documents

December 28, 2023

Collaboration between project participants is vital for the successful execution of a venture. However, in the event of challenges on the project or a contractual breach, project owners may possess rights to intervene and, under certain conditions, carry out the contractor’s work. When ongoing work is not in compliance with the contract, the parties’ can typically look to the underlying contract that defines these specific conditions for the owner to assert its rights to intervene and take over the contractor’s work.

Section 2.5 of A201^®– 2017 General Conditions of the Contract for Construction sets forth the terms and procedures for an owner to assume control of a contractor’s work. In short, if the contractor fails to carry out the work, as defined by the contract documents, and fails to begin and continue to correct the default within 10 days of receiving notice from the owner, the owner may correct such default. A201 also states that such action by the owner and amounts charged to the contractor are subject to prior approval by the architect.

A201 specifies that the owner must follow a specific procedure before undertaking the contractor’s work, either in whole or in part. The owner must give the contractor written notice regarding correction of the problem. Upon receipt, the contractor has ten days to begin and to continue correction. If remedial action has not been undertaken by the end of this ten-day period, the owner may correct the deficiencies with the owner’s own forces.

Section 2.5 does not require the owner to provide additional notice to the contractor beyond the ten-day period. The owner, however, may decide to notify the contractor immediately before commencing work in order to avoid other disputes at the job site.

Carrying out the contractor’s work is not intended to preclude the owner from pursuing other available remedies, such as arbitration or litigation. Further, the architect may also withhold or nullify a certificate for payment to recover the cost of corrections, including compensation for the architect’s services caused by the default.

It is important to note that the owner does not have an obligation to carry out the work regardless of the fact that the contractor is not in compliance with the contract documents. The owner also has the right to allow the contractor to continue with the work and to enforce the warranty that the work must comply with the contract documents.

AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.