Contract documents

November 29, 2023

During a construction project, a “Claim” typically refers to a formal request by one party (usually the contractor or the owner) for compensation or other relief due to change in circumstances that arose during the work or after the parties entered into a contract. Claims typically arise when there is a disagreement or dispute between the contracting parties.

Typically, the contract will define what a Claim entails. Section 15.1.1 of A201^®-2017 General Conditions of the Contract for Construction defines a Claim as “a demand or assertion by one of the parties seeking, as a matter of right, payment of money, a change in the Contract Time, or other relief with respect to the terms of the Contract.” Additionally, Claims also include “other disputes and matters in question between the Owner and Contractor arising out of or relating to the Contract.” Importantly, this Section also clarifies that the party asserting a Claim bears responsibility for substantiating the Claim.

Section 15.1.1 also clarifies that the owner is not required to file a Claim to impose liquidated damages in accordance with the Contract Documents. If the owner-contract agreement stipulates that liquidated damages may be assessed due to a delay in achieving substantial completion, the deduction of liquidated damages by the owner is self-executing. In other words, the owner need not assert a Claim, since there is no need to change the provisions of the contract.  In these cases, the contractor is responsible for justifying an extension of Contract Time pursuant to Article 8 of A201. Unless the Contract Time is extended, the owner’s right to liquidated damages is fixed by the contract and no formal Claim by the owner is required.

Many construction contracts describe how Claims should be managed. For example, following the assertion of a Claim by one party, the contract may include provisions for how any such issue should be documented, submitted, and resolved. Additionally, the contract often describes a dispute resolution process, such as litigation, mediation, or arbitration, if the parties cannot reach an agreement in resolving the issue. These are important provisions to review and manage, as the Claim’s viability may depend on adherence to such procedures.

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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.