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© 2012 McNees Wallace & Nurick LLC CONTRACT ESSENTIALS Diane M. Tokarsky Chair, Construction Law 100 Pine Street, PO Box 1166 Harrisburg, PA
© 2012 McNees Wallace & Nurick LLC COMMUNICATE 2
© 2012 McNees Wallace & Nurick LLC PROPOSAL VS. PURCHASE ORDER WHAT DOES THAT MEAN? 3
© 2012 McNees Wallace & Nurick LLC THEIR CONTRACT YOUR PROPOSAL 4
© 2012 McNees Wallace & Nurick LLC KILLER CONTRACT CONTRACT OF ADHESION 5
© 2012 McNees Wallace & Nurick LLC UNDERSTANDING KEY CONTRACT TERMS 6
© 2012 McNees Wallace & Nurick LLC UNDERSTANDING KEY CONTRACT TERMS Term and Termination Warranty of Services Events of Default / Remedies for Breach / Limitation of Liability Insurance and Indemnification Statute of Limitations Alternative Dispute Resolution / Choice of Law / Forum Selection 7
© 2012 McNees Wallace & Nurick LLC TERM For Cause For Convenience 8 TERMINATION PROVISION
© 2012 McNees Wallace & Nurick LLC WARRANTY OF SERVICES Engineer represents and warrants that all work shall be performed with the highest degree of skill and care 9
© 2012 McNees Wallace & Nurick LLC EVENTS OF DEFAULT REMEDIES FOR BREACH 10
© 2012 McNees Wallace & Nurick LLC INSURANCE SEND IT TO YOUR BROKER! 11
© 2012 McNees Wallace & Nurick LLC INDEMNIFICATION Joint and Several Liability Senate Bill 1131 – Effective 6/28/11 Several liability if less than 60% at fault Exception for contractual arrangements 12
© 2012 McNees Wallace & Nurick LLC KEY PROVISIONS OF INDEMNITY AGREEMENT To the extent caused by Indemnification for Indemnitee's negligence Indemnification for employee claim Cost of enforcing indemnification obligation 13
© 2012 McNees Wallace & Nurick LLC SAMPLE INDEMNIFICATION AGREEMENT To the fullest extent permitted by law, you shall defend, indemnify and hold harmless [Company] its officers, directors, shareholders, affiliates, insurers, agents, and employees (hereinafter "Indemnitees") from and against any and all liabilities, damages, losses, causes of action, claims or suits, including expenses and attorneys' fees, for or on account of any kind of injury to person, bodily or otherwise, sickness, disease or death, or damage to or destruction of property, or any other circumstances, in any way arising out of the performance of your work or supply of materials, but only to the extent caused in whole or in part by your negligent acts or omissions or breach of contract, or by the negligent acts or omissions or breach of contract by anyone directly or indirectly employed by you or anyone for whose acts you may be liable, regardless of whether or not such claim, damage, loss or expense is caused in part by a party indemnified hereunder. In any claims against any Indemnitee by your employee, the indemnification obligations under this paragraph shall not be limited by a limitation on amount or type of damages, compensation or benefits payable by or for you under workers' compensation acts, disability benefit acts or other employee benefit acts. It is expressly agreed that this indemnification agreement is intended to comply with the requirements of 77 P.S. §481(b). In the event that you are requested but refuse to honor the indemnity obligations hereunder, then in addition to all other obligations, and upon adjudication of your liability for indemnification, you shall pay the cost of bringing such action, including, but not limited to attorneys' fees, costs, expenses and expert fees, to the party requesting indemnity. 14
© 2012 McNees Wallace & Nurick LLC 15 INDEMNIFICATION. To the fullest extent permitted by law, and only to the extent such Losses as defined herein are covered by the Contractor's insurance, Contractor expressly and unconditionally agrees to indemnify, defend, save and hold Client harmless from any and all actions, proceedings, losses, liabilities, expenses, reasonable attorneys fees, court costs, litigation defense costs, and damage (collectively, "Losses") from injury or death to the person or to the property of any person arising or alleged to have arisen in any way, directly or indirectly, out of the acts or omissions and any operations of Contractor with regard to (i) the Work under this Agreement and any predecessor agreement(s) and (ii) any additional services performed by Contractor for residents, tenants or Owners of properties where Contractor performs services hereunder. This indemnity applies without restriction to all existing or pending liabilities and claims and any that may arise in the future in connection with Contractor's performance of Work for Client. Whether relating to prior contracts between Client and Company or arising after the termination of this Contract; provided, however, that Contractor's indemnity shall not be deemed to cover Losses resulting from subsequent alterations to the Work by Client or Client's agents, employees or other contractors. Client reserves the right to require a defense by Contractor using attorneys of Contractor's choice who are reasonably acceptable to Client, or in the event Contractor fails to provide such defense, to retain attorneys of the Company's choice at Contractor's expense, but only to the extent Contractor's insurance company consents to such right of approval or retention.
© 2012 McNees Wallace & Nurick LLC STATUTE OF LIMITATIONS 2 years – Negligence 4 years – Breach of Contract 16
© 2012 McNees Wallace & Nurick LLC ALTERNATIVE DISPUTE RESOLUTION Mediation Arbitration Litigation 17
© 2012 McNees Wallace & Nurick LLC CHOICE OF LAW FORUM SELECTION 18
© 2012 McNees Wallace & Nurick LLC NEGOTIATION TIPS Evaluate the opposition Know what terms are essential Offer up an alternative 19
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