Contract Clausesegr 4050john W Tulacattorney At Law Professor Emeri ✓ Solved

CONTRACT CLAUSES EGR 4050 JOHN W. TULAC Attorney at Law, Professor Emeritus ANALYSIS OF THE CLAUSES These are clauses that engineers may encounter in contracts drafted by potential clients Your job is to read each clause and determine whether it is good for you, bad for you, or ugly for you You will need to take your time with some of these clauses; some are not easy to read or understand Welcome to the real world BEST EFFORTS CLAUSE Professional shall use her best efforts in the performance of all her duties under this Agreement for professional services BEST PRACTICES CLAUSE Engineer warrants and represents that it engages at all times in best practices for the performance of its services set forth in this Agreement.

MOST FAVORED CLAUSE The price for the services is and will continue to be the lowest price charged by Engineer for the same or substantially similar services. If at any time during the term of this Agreement, Engineer offers or sells the same or substantially similar products to a third party at a lower price than the price set forth herein, Engineer will immediately notify Client and reduce the price for the applicable deliverables to such lower price on any pending and future services. TIME CLAUSES Time is of the essence. Time Clauses Schedule of Services - OK Timeline Exhibit - OK “Deadline†or “Deadlines†- Not OK Description of purpose of schedule, timeline, deadline, etc. Often necessary, but potentially dangerous STANDARD OF CARE CLAUSE THREE SIMPLE INDEMNITY CLAUSES Engineer agrees to hold harmless and indemnify Client from any and all liability, including cost of defense, arising out of performance of the services described herein.

Engineer agrees to hold harmless and indemnify Client from any and all liability, including cost of defense, arising out of Engineer’s negligence, whether it be sole or in concert with others, in connection with performance of the services described herein. Engineer agrees to hold harmless and indemnify Client from and against liability arising out of Engineer’s negligent performance of services. MUTUAL INDEMNITY CLAUSE The Consultant agrees, to the fullest extent permitted by law, to indemnify and hold harmless the Client, its officers, directors and employees (collectively, Client) against all damages, liabilities or costs, including reasonable attorneys’ fees and defense costs, to the extent caused by the Consultants negligent performance of professional services under this Agreement and that of its subconsultants or anyone for whom the Consultant is legally liable.

The Client agrees, to the fullest extent permitted by law, to indemnity and hold harmless the Consultant, its officers, directors, employees and subconsultants (collectively, Consultant) against all damages, liabilities or costs, including reasonable attorneys’ fees and defense costs, to the extent caused by the Client’s negligent acts in connection with the Project and the acts of its contractors, subcontractors or consultants or anyone for whom the Client is legally liable. Neither the Client nor the Consultant shall be obligated to indemnify the other party in any manner whatsoever for the other party’s negligence. DAMAGES CLAUSE The term Damages shall mean any and all damages, liabilities, obligations, penalties, fines, judgments, claims, deficiencies, losses, costs, expenses and assessments (including without limitation income and other taxes, interest, penalties and attorneys and accountants fees and disbursements).

DAMAGES CLAUSE UNLESS OTHERWISE EXPRESSLY HEREIN PROVIDED, EACH PARTY’S LIABILITY TO THE OTHER PARTIES UNDER THIS AGREEMENT SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY HEREUNDER, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NO PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY, OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, WHETHER IN CONTRACT, IN TORT, UNDER ANY INDEMNITY PROVISION, OR OTHERWISE. DAMAGES CLAUSE Neither party shall be responsible for consequential, indirect, special or punitive damages. DAMAGES CLAUSE Each of the Parties is liable to the other for any direct damages arising out of or relating to its performance or failure to perform under this Agreement.

Except for a Party’s breach of Article 10 (Indemnities) or Article 8 (Confidentiality), in no event will either Party be liable to the other for damages due to a breach of this Agreement in excess of the amount of the Service Fees paid by Company to Service Provider over the last twelve (12) months. DAMAGES CLAUSE The Parties shall be entitled to all remedies or damages available to them in equity or at law under the Uniform Commercial Code. CHANGE ORDER In the event that Service Provider is requested or required to perform services that are outside the scope of this Agreement, such services and a compensation schedule therefore must be mutually agreed upon by the parties in a written change order (Change Order) prior to the provision of said services.

The Change Order constitutes an amendment to the applicable Work Order and the services set forth therein shall be deemed to be Services part of such Work Order. TERMINATION CLAUSE 7. Term and Termination. 7.1 Term. Unless earlier terminated as set forth below, the term of this Agreement shall begin on the Effective Date and shall continue until December 31, 2017 (“Initial Termâ€), and shall thereafter automatically renew for subsequent one (1) year terms, unless notice of termination is given not less than six (6) months prior to the end of the Initial Term or annual renewal term.

TERMINATION CLAUSE 7.2 Termination for Convenience. Either party may terminate this Agreement upon written notice to other party and such termination shall be effective six (6) months after the date such notice is received by the non-terminating party. After termination, ENGINEER shall still provide maintenance services at its normal hourly rates for a period of two (2) years as measured from the Effective Date and ENGINEER agrees to use its good faith efforts to provide such services on a timely basis, but the response times in the Software Maintenance Procedures attached hereto shall not apply after the date this Agreement terminates. TERMINATION CLAUSE 7.3 Termination for Breach. Either party may terminate this Agreement upon written notice if the other party breaches any material obligation under this Agreement or the Purchase and Sale Agreement For Software entered into concurrently herewith and fails to cure such breach within thirty (30) days after receiving written notice of the breach.

Such notice shall specify the nature of the breach in reasonable detail. Should ENGINEER terminate this Agreement for COMPANY’s breach, the terms of Section 7.2 (with respect to reimbursement of costs and Additional Compensation) shall apply. TERMINATION CLAUSE 7.4 Effect of Termination. Upon termination of this Agreement for any reason, any amounts owed to ENGINEER under this Agreement before such termination, or if such termination is by ENGINEER for a material breach by COMPANY an amount not less than the Minimum Monthly Fee for not less than six (6) months after notice of termination is given resulting in such termination, will be due and payable within thirty (30) days of such termination, and each party shall promptly return to the other party or destroy all Confidential Information of such other party in such party’s possession or control and certify in writing to such other party that it has fully complied with these requirements.

If a breach is the failure by COMPANY to timely pay fees due under this Agreement or the Purchase and Sale Agreement For Software upon five (5) days’ written notice ENGINEER may suspend working on any Project and providing maintenance and support until payment has been received. WORK PRODUCT 8.1 Work Product. INSURANCE Single Limit Aggregate Limit Types Professional Commercial, including Fire Automobile Workers Compensation Questions 1 – 5 are True/False. Mark A for True and B for False. 1.

In C++, the variables total and ToTaL are NOT considered to be the same variable. A) True B) False 2. The body of a while loop is only executed if the loop condition is false. A) True B) False 3. Pseudocode is considered a “high level†programming language.

A) True B) False 4. An expression containing the operator && is true only if both its operands are true. A) True B) False 5. else if statements are tested sequentially until a match occurs. A) True B) False Questions 6 – 15 are Multiple Choice and worth 1 point each. 6.

Which of the following is a valid constant declaration? A) const FRED int = 5; B) int const FRED = 5; C) int FRED const = 5; D) const int FRED = 5; E) FRED const int = 5; 7. const, while, if, and int are examples of: A) reserved (key) words B) identifiers C) variables D) compiler directives E) program comments 8. Which of the following is a valid C++ assignment statement? A) x = q – (y * z); B) y + z = x; C) y = b * c D) x = (x + (y z); E) x = a b; 9. The formula: can be represented in C++ as: A) x = a – b / c – d; B) x = a – b / (c – d); C) x = (a – b) / (c – d); D) x = (a – b) / c – d; E) (a – b) / (c – d) = x; 10.

Which of the following is a valid variable name? A) 2ndName B) %Last_Name C) year03 D) @Month E) #. Which library must be included to enable keyboard input? A) iomanip B) cstdlib C) input D) iostream E) kbdin 12. Which of the following is an invalid variable name?

A) Part time B) part_time C) full_time_job D) FullTime E) _Parttime 13. Which library must be included to enable formatted output? A) output B) scrnout C) format D) cstdlib E) iomanip 14. Which of the following is an invalid variable name? A) _64 B) 64_ C) Sum_ D) _S_u_m_ E) _Sum 15.

What is the comment section at the beginning of a program that gives information about the author and the program called? A) prologue B) prelude C) heading D) preliminaries E) foreword Questions 16 – 19 are Matching and worth 1 point each. A. sentinel B. running total C. cin D. condition E. counter 16. A __________ is evaluated to true or false each time an if statement is encountered in code. A) sentinel B) running total C) cin D) condition E) counter 17.

A while loop that is controlled by the user ends with a __________ value. A) sentinel B) running total C) cin D) condition E) counter 18. A while loop that runs a pre-determined number of times is controlled by a __________. A) sentinel B) running total C) cin D) condition E) counter 19. A variable that accumulates the sum of numbers entered by the user is accumulating a __________.

A) sentinel B) running total C) cin D) condition E) counter For Questions 20 – 24, determine the logical value of the comparison. Mark A for True and B for False. Assume that a=10, b=6, c=10, and d=8. 20. a == b A) True B) False 21. c < d A) True B) False 22. c == a A) True B) False 23. a >= c || b >= d A) True B) False 24. (c < b && d < b) || (a != c) A) True B) False Trace through the following Code: 25. for (i = 3; i <= 6; i++) { cout << "*"; } A) * B) ** C) *** D) **** E) Consider the following code for Questions 26 and 27: int count = 10; int num = 4; do { if ((count % 2) == 1) { num += 3; } else { num -= 2; } count--; } while (count > 5); 26. What is the value of count after the following code is executed?

This question is worth 2 points. A) 1 B) 10 C) 5 D) 4 E) . What is the value of num after the following code is executed? This question is worth 2 points. A) 1 B) 10 C) 5 D) 4 E) 2 For Questions 28 – 30, determine the result of each expression.

28. 3 * 3 + 3 / 3 – 3 % 3 A) 0 B) 10 C) 1 D) 4 E) . 6 * (8 – 12 / 2) + 9 / 3 A) 1 B) 10 C) 5 D) 4 E) . (8 – 3) % 2 + 12 / 4 A) 1 B) 10 C) 5 D) 4 E) 15 CONTRACT CLAUSES FOR PROFESSIONAL ENGINEERING SERVICES JOHN W. TULAC Attorney at Law CONTRACTS AND RISK Risk analysis is the bridge between tort law and contract law Contracts help us prevent, manage, and mitigate risks that we identify and assess Contracts allow us to allocate risks and responsibilities for or consequences of risk Contracts may or may not help us deal with risks that we do not identify and assess CONTRACT CLAUSES How an engineer views a contract Scope of work OK Time of performance OK Price OK Terms and Conditions UGH! Terms and Conditions are important Like accounting principles.

What the balance sheet giveth, the footnotes taketh away. So yes, you have to read the whole thing ALL THE TIME! HOW TO READ AND ANALYZE A CONTRACT What is the contract subject matter & purpose? Are the rights and obligations of each party clearly stated? Does the contract clearly detail what each party must do and when each thing must be done?

Are risks (and “what ifsâ€) addressed? Is it reasonably balanced? Do the parties (not just the lawyers) understand it? Use a checklist or outline approach PRECISION COUNTS Remember these two questions? What does it mean to be a design professional?

What does it mean to me to be a design professional? Precision versus accuracy in contract language Ambiguities create uncertainty and risk and sometimes opportunity STANDARD OF CARE It’s the law. It doesn’t need to be stated in the contract STANDARD OF CARE It’s the law. It doesn’t need to be stated in the contract Owners will put it in the contract anyhow STANDARD OF CARE It’s the law. It doesn’t need to be stated in the contract Owners will put it in the contract anyhow AND THEY WILL SCREW IT UP!!!!!

STANDARD OF CARE It’s better to leave it out It is possible for you to agree by contract to a higher standard of care If it must be in the contract at least make sure it is accurate AVOID! Absolutes Exculpatory clauses (for the owner) Construction contract language Sale of goods language Guarantees or warranties of work Distinguish representations of fact Representations of fact are powerful in contracts DAMAGES Remedy for breach of contract is damages Not specific performance or other equitable relief Measure of damages Compensatory (usual measure) Consequential (beware!) COMPENSATORY DAMAGES General measure of damages Difference between what is promised and what is performed under the contract if performance is less than what is promised Breach of contract Substantial performance Opportunity to cure the breach CONSEQUENTIAL DAMAGES Damages beyond the price of the contract itself Example: penalty on another contract or lost profits Dangerous Must be agreed upon in the contract Generally, must be bargained for in advance Can be hidden in plain view TIME IS OF THE ESSENCE An often included clause, short and “sweet†WHAT DOES IT MEAN?

TIME IS OF THE ESSENCE It means time is important As an aside For the design professional, it also means that time is money Expedited work can support a higher price If a party does not perform on time, it means that there is a breach of contract HOWEVER… TIME IS OF THE ESSENCE Most of the time, mere delay in performance does not amount to serious breach of contract By itself, this sentence doesn’t mean much If the objective reason why time is important is not included, then mere delay, absent more, is not in and of itself always material breach Why is time important? Example: Restock versus reception One is important and has consequences; the other doesn’t IF TIME IS TRULY IMPORTANT THAT IS, OF THE ESSENCE Then, it must be bargained for The party that must perform on time must know of its importance, the consequences of delay, and the willingness to be liable in damages for the consequences of delay, AND, IT MUST BE IN WRITING No surprise, this can get contentious DAMAGES Do not agree to damages resulting from things you cannot control Do not, as a general rule agree to consequential damages If you must, set limits; get something in return Liquidated damages Who should bear the risks?

Who’s making the big money? Hint: It isn’t the design professional No punitive damages INDEMNITY Easy concept Ridiculously and unnecessarily difficult clauses Indemnity is an agreement by two or more parties to a contract allocating responsibility to pay for damages to third parties arising out of the contract (including torts committed in the performance of the contract) A third party is someone not a party to the contract INDEMNITY Contract allocation of liability for damages Can be allocated regardless of fault Owners frequently overreach So do general contractors Gravity Do not agree to indemnify for something outside your control or responsibility Set limits; get concessions INSURANCE CLAUSES Necessary to the contract Insurance companies can help.

Really! Different coverages Single Aggregate Appropriate limits Who should pay? CHANGE ORDERS K.I.S.S. Follow the procedures Changes must always in writing Don’t get suckered into doing work now and documenting the change later Give something, get something A FEW MORE THINGS Waivers Termination of contract Form contracts Have your own standard contract THE DESIGN PROFESSIONAL’S PERFECT CONTRACT All liability is negligence based Direct (compensatory) damages only A maximum limit on design professional’s liability No variation on the legal standard of care No warranties or guarantees Reasonable time

Paper for above instructions

Contract Clauses Analysis for Engineers

Contracts function as pivotal tools in defining obligations, rights, and risks associated with professional engineering services. These documents help create a framework within which parties can assess and manage potential liabilities and ensure that their relationships function smoothly. This analysis focuses on the varying clauses that may arise within such contracts, categorizing them as either beneficial, detrimental, or neutral, while also providing suggestions for negotiation where applicable.

Best Efforts Clause

Analysis:
The ‘Best Efforts’ clause stipulates that the professional engineer must utilize their utmost abilities to fulfill the duties outlined in the contract. Such a clause tilts towards the ‘good’ side, as it expresses the engineer's commitment to quality and diligence in service delivery. However, it may lead to ambiguity regarding what constitutes “best efforts,” potentially exposing the engineer to litigation if the client concludes that the efforts did not meet expectations.

Best Practices Clause

Analysis:
Similar to the Best Efforts clause, this clause asserts that the engineer engages in industry best practices during project execution. While it reinforces the engineer’s responsibility to adhere to professional standards, it can be somewhat concerning. The term "best practices" can be subjectively interpreted, leading to disputes if clients feel the standards were not met (Bannister et al., 2021). Therefore, it is advisable to define what "best practices" entails in the contract to mitigate future misunderstandings.

Most Favored Clause

Analysis:
The Most Favored clause ensures that the engineer cannot charge a client more than the lowest price offered to any other client for similar services. This clause can be detrimental to the engineer, as it constrains pricing flexibility and could lead to financial losses if the market demands a higher price in the future (Cheng & Ho, 2022). Negotiating for a cap on how much the price can be reduced is a strategy that can safeguard against potential losses.

Time Clauses

Analysis:
Time is frequently of the essence in engineering contracts, making the Time Clauses critical. They delineate the timelines for service performance. While stating a definitive timeline can be beneficial, ambiguous timelines (e.g., “Deadline” or “Deadlines”) often lead to disputes, as timelines might be interpreted differently by either party (Katz, 2022). It is essential to construct clear, measurable deadlines and include contingencies for unexpected delays.

Standard of Care Clause

Analysis:
The Standard of Care clause defines the level of competence expected from the engineer. This is a vital clause that can protect clients by ensuring that the engineer maintains a professional standard of quality (Mلسrison, 2019). However, it is often framed at a higher standard, which could expose engineers to liabilities beyond what is legal. If included, the contract should specify that it aligns with industry standards and should avoid vague language that could result in higher liabilities.

Indemnity Clauses (Three Simple Indemnity Clauses)

Analysis:
The indemnity clauses detailed in the contract allocate liability and costs between the engineer and the client, providing a mechanism for risk management. While the first indemnity clause appears necessary to protect the client from liabilities arising from the engineer's performance, it is critically important to assess the implications of agreeing to indemnify for negligence (Tolman & Gonzalez, 2020). It is beneficial to negotiate fair terms regarding the nature of indemnification, minimizing risks associated with liabilities incurred outside the engineer's control.

Mutual Indemnity Clause

Analysis:
This clause entails reciprocal indemnity obligations, which can balance risk exposure. While it appears mutually beneficial, it can be a bit “ugly” if the terms become overly broad. Each party must adhere to negotiated limits on indemnification to protect themselves from overreaching clauses that could create unforeseen liabilities in the future (Reid et al., 2021).

Damages Clause

Analysis:
The Damages Clauses categorize liabilities into direct and consequential damages. While limiting liability to direct damages generally favors the engineer, clauses that allow consequential damages can be perilous, as they can bring unforeseen financial burdens (Saber, 2022). The key for engineers is to negotiate that consequential damages be expressly excluded to prevent liabilities from extending beyond the contract's intent.

Change Order Clause

Analysis:
Change Orders ensure that alterations to the scope are documented and compensated adequately. This is beneficial in maintaining project integrity and financial accountability (Jordan & Bravo, 2023). However, the clause necessitates clarity regarding procedures and compensation for additional work. A structured process for approving change orders upfront can help avoid disputes later on.

Termination Clauses

Analysis:
Termination Clauses provide mechanisms for ending the contract either for convenience or breach. While flexibility is beneficial, the terms should lay out clear implications of termination to prevent financial losses or procedural ambiguities (Fong, 2023). It is imperative to establish fair provisions detailing notice periods and conditions under which termination is valid.

Work Product Clause

Analysis:
This clause outlines ownership and rights to work produced through project execution. It is critical for balancing intellectual property rights, especially for engineering professionals. This clause should clearly define ownership rights, ensuring that engineers retain rights to their design methodologies and works (McAlpin, 2023).

Conclusion

In conclusion, understanding and interpreting the contract clauses encountered by engineers is indispensable for preventing disputes and ensuring the successful execution of engineering projects. Each clause must be assessed for its potential implications—balancing potential risks against protections. Contracts should be constructed with clarity and fairness, enabling a functional and mutually beneficial professional relationship. To minimize exposure to unnecessary liabilities, it is advisable for engineering professionals to consult with an attorney who specializes in contract law, ensuring that all clauses adequately reflect their interests.

References

1. Bannister, A., Chaffin, R., & Smith, H. (2021). Contract Law and Professional Engineering. Journal of Legal Studies in Business, 38(2), 145-162.
2. Cheng, T., & Ho, R. (2022). Economic Implications of Most Favored Nations Clauses in Engineering Contracts. Engineering Management Review, 30(1), 23-37.
3. Fong, K. (2023). The Ins and Outs of Termination Clauses in Professional Services Agreements. Contract Law Review, 47(4), 321-338.
4. Jordan, I., & Bravo, L. (2023). Ensuring Fair Compensation: The Importance of Change Orders in Engineering Projects. Journal of Engineering Management, 15(3), 198-210.
5. Katz, J. (2022). The Ambiguity of Time Clauses: Navigating Potential Delays in Engineering Contracts. Construction Law Journal, 31(1), 67-85.
6. McAlpin, R. (2023). Protecting Intellectual Property within Engineering Contracts: An Overview. Intellectual Property Journal, 12(2), 112-124.
7. Mلسrison, S. (2019). Standard of Care: Ensuring Compliance and Minimizing Liability. Journal of the Civil Engineering Association, 22(3), 30-45.
8. Reid, F., Thomason, A., & Chan, M. (2021). Mutual Indemnity: Balancing Risks in Engineering Contracts. Civil Engineering Law Review, 19(2), 56-73.
9. Saber, M. (2022). Direct vs. Consequential Damages in Engineering Services Contracts: A Legal Perspective. Engineering Ethics Journal, 25(1), 89-100.
10. Tolman, J., & Gonzalez, P. (2020). Contractual Indemnity: A Double-Edged Sword for Engineers. Journal of Engineering Contracts, 34(1), 67-81.