By Jodie McDougal of Dentons Davis Brown
Published April 12, 2022
In my nearly 20 years of practice in construction law, I have seen trends and practices come and go. One trend that is here to stay: owners and general contractors including “fine print” waiver language within their project templates that they are asking others to sign, including their change order templates (Change Orders) and payment application templates (Pay Apps).
There are reasonable arguments to be made on all sides within the debate over this type of fine print waiver language within form construction contracts. For the owners and general contractors I represent, I certainly understand the basis for the inclusion of, and have drafted, waiver language at the bottom of Change Orders and Pay Apps, and, if the other party signs these documents without any concern for the fine print waiver language, then that is obviously a good outcome for the owner or general contractor. Conversely, when I represent the general contractor or subcontractor being asked to sign those project documents, I also understand the basis for objection to such waiver language, including where there are known actual or potential claims. At the end of the day, all parties must work reasonably and in good faith in terms of any waiver language being considered, knowing that the final resolution will be highly dependent upon the specific situation and claims that one is being asked to waive.
Waiver examples
With Pay Apps, one may see owners and general contractors including language providing that, by submission of the Pay App, the signing contractor is not only certifying that it is waiving liens to the extent of all payments received to date but is also waiving all other claims it may have to date.
With Change Orders, owners and general contractors may include language providing that, in exchange for the additional comp under the Change Order, the signing contractor agrees it has been paid in full for all changes to date and has no other claims to date. A Change Order may include waiver language under which the signing contractor certifies that it is waiving all claims for extensions of time/schedule impacts and incurred delay costs not specifically identified within the Change Order and/or otherwise before the date of the Change Order.
Too often, companies do nothing when confronted with this type of fine print waiver language. It happens for a variety of reasons, including because the language is buried within the fine print and/or the person reading the form document believes that type of fine print waiver language is not enforceable. However, many times, this type of waiver language, when clearly written, is enforceable.
Bottom line
Companies being asked to sign a document with waiver language should consult their attorney for specific guidance, which may range from entirely deleting the waiver language, signing, and sending it back, to modifying the waiver language to list out the exceptions to waiver and/or known claims to date or to otherwise provide certain reservation of rights language. Whatever the case, one should not turn a blind eye when confronted with fine print waiver claim language.