Addenda to Construction Contracts Can Be an Issue

We’ve all been there.  Your client either has a well drafted standard subcontract (with any luck in consultation with an experienced construction attorney) that it presents to its subcontractors and suppliers or your client is presented with a construction contract that has some provisions that it would prefer were either different or gone altogether.

In the first of these scenarios, your client often gets push back from a subcontractor to change certain provisions.  Such a response is not necessarily a bad thing depending on the provisions that the potential subcontractor may have.  The construction contract documents will govern the way that the project moves forward and will be strictly enforced in Virginia and elsewhere so some early give and take is not unusual or unwanted.

In the second scenario, your client is likely to be reading a fairly one sided document.  The General Contractor has drafted the contract and is “north” of your client in the payment chain.  Like it or not, they will in most instances leave it to you and your attorney to root out the particularly egregious on sided terms and seek to negotiate them to some sort of equality.

In and of themselves, I see nothing wrong with this sort of early give and take.  Early “nitpicking” of these contracts is what I do and what you should do before you sign a contract.  However, one way that changes are often made is by addendum.  Such a method can be, as they say, “fraught with peril.”  Why?  Because unless very carefully drafted, such addenda often, if not always, provide grey area.  While I as a construction lawyer personally love grey area (it provides wiggle room and areas for argument that make me money), contractors and subcontractors should avoid it because when lawyers get to argue, profit margins wane.

The reason that such grey area can be caused by this method of contract revision is that in many cases, the addendum is not specific as to what particular clauses and phrases of the original contract are being changed.  They often simply state a general proposition that seeks to alter certain obligations in the contract without actually stating specific language that is to be altered or they act as if a whole provision is modified, but that may or may not be the case.  I know as a construction attorney, I see such general changes often.

What is a better practice?  In my mind, either have an addendum that specifically states that an entire provision is to be stricken and that the new language for that provision is to be what is in the addendum or simply make the revisions directly to the document itself.  Such practices should make it abundantly clear what the agreement of the parties is and at the very least keep the arguments as to the meaning of the contract to a minimum should a problem arise.

Do you have other insights?  Have a story of such an issue to share?  Please let me know below.

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