By AIA Contract Documents
October 28, 2022
Contract negotiations between a building owner and maintenance contractor often start with the contractor submitting a proposal to the owner for the work they intend to provide. Contractor’s proposals contain a variety of information and often include a detailed description of the requested maintenance work, the amount compensation the contractor will receive, and a proposed schedule for performing the work.
Proposals also tend to come with a variety of other terms and conditions which, not surprisingly, tend to favor the contractor who submitted the proposal. For example, a close review of the maintenance contractor’s proposal might reveal any of the following problematic terms:
(a) that disputes are to be resolved in the state where the maintenance contractor’s home offices are located, far away from the facility where the maintenance work is performed;
(b) that the contract will automatically renew on an annual basis unless notice is provided months in advance; or
(c) that the contract explicitly disclaims any damage the contractor does to the owner’s property in the performance of its maintenance work.
A contractor’s proposal might also be silent on important items such as requirements for the contractor to maintain insurance or requirements for the contractor to provide a warranty for its work.
In many instances, the building owner may agree with the price, schedule, and scope of work in the contractor’s proposal, but will disagree with the unfavorable (at least from the owner’s perspective) terms and condition. However, if the owner signs the contractor’s proposal, the likely result would be that the signed proposal would, in fact, be the legally binding contract between the parties. As a result, the owner would be held to all the terms contained in the proposal – including the unfavorable ones.
So, should you sign a maintenance contractor’s proposal? The answer, naturally, depends on what is, and is not, included in the proposal. If you are inclined to sign a maintenance contractor’s proposal, makes sure to review it thoroughly and edit out any provisions that cause you concern. Alternatively, a building owner can always create their own contract (or use a standard form contract) in lieu of relying on a contractor’s proposal as the basis for the contract.
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.