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5 Ways to Avoid Ambiguity in Construction Contracts

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Byrne and O'Neill
Byrne and O'Neill

The document discusses ways to avoid ambiguity in construction contracts. It recommends: 1) Keeping contract language simple, concise, and in plain English to be understood by all parties. 2) Defining any technical or specialized terms used to prevent disagreements over meanings. 3) Including all parts of the agreement in the contract itself or incorporating them by reference, rather than relying on external documents or negotiations. 4) Including an order of precedence clause to resolve any conflicts between different contract documents like drawings and specifications. 5) Carefully reviewing and customizing any standard-form agreements used rather than adopting them wholesale.

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Ways to Avoid Ambiguity in Construction Contracts 5
In construction contracts, there are many ways for ambiguity to rear its head. Since construction contracts are usually a combination of many documents – the principal agreement, general conditions, supplementary conditions, specifications, drawings and change orders – the single document that results can often be full of vague wording and ambiguous details. Rushing these documents can lead to conflicts being missed or many other unintended consequences.
Making an effort to avoid ambiguity should be a primary goal when drafting or negotiating a construction contract. This helps ensure that all parties get what they want, including whatever benefits you bargained for in the contracts, and the smooth administration and fulfillment of the contract. You also get to avoid lengthy and expensive legal disputes. To avoid ambiguity in your construction contract, you can follow these 5 steps.
Keep your contract writing simple and concise. Construction contracts will always be read by a lot of different people from a wide range of professions – including judges that have no knowledge of the construction industry. Using simple, plain english and shorter sentences will keep things clear. Also try to avoid legalese and redundancy, as it will only cloud and confuse your language. You want your contracts to be clear, and easy to read and understand for everyone. Keep it Simple
Courts will give ordinary terms their ordinary meanings and technical terms their technical meanings. The meanings of words can not be separated from the context in which they’re interpreted on a contract, and often times the parties will disagree on what terms exactly mean in different contexts. To avoid these disputes, simply capitalize and define terms to attribute specific meanings. Then use the capitalized terms as you need throughout the contract. Define key terms
If a contract is comprehensive, courts will often prohibit the use of other documents to give meaning to the contractor’s intentions. This means that you have to include every part of the agreement in the contract. Statements or negotiations made during pre-bid meetings, or even signed documents from during this time, will not be effective in contradicting express terms in the contract. Include every term of the deal in the contract or incorporate key documents by reference. Include all parts of the agreement in the contract.
Since there can be many documents making up construction contracts, conflicts can arise between requirements contained within the documents. For example, the drawings and specifications are usually on a different document. One way to address that is to include a clause that states that in the event of a conflict, the specifications take precedence over the drawings. Or that certain documents in the contract take precedence over others. Simply lay out the order of hierarchy for all documents and materials. You can also state that what is required of any contract document is binding as if required by law. Include an order-of- precedence clause
Standard-form agreements such as AIA and ConsensusDocs are used commonly in the construction industry. However there are risks associated with these forms as they tend to be written broadly, contain terms that are inapplicable to the transaction at issue and are often used without a full review by the associated parties. Even if both parties orally agree to terms that are different from what is written, oral understandings should always lead to written agreements. So it’s important to read all terms before using standard-form agreements. Add terms that you think should be in the contract and delete terms that are inapplicable to you. Make proper use of standard forms.

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5 Ways to Avoid Ambiguity in Construction Contracts