What's Not in Most Industry Form Contracts but Should Be to Ensure Your Project Complies with Recent Changes to the Americans With Disabilities Act
Is your contract constructed as well as your project? Does it contain provisions to protect against non-compliance with the recent changes to the design standards of Title III of the ADA? While most industry form contracts for multi-million dollar projects (e.g., high-rise condominiums, hotels, office buildings, and strip malls) cover the fundamental issues, many of the most crucial items are often not addressed, including express requirements for the compliance with Title III.
The purpose of Title III of the ADA is to prohibit disability-based discrimination in places ofpublic accommodation, like the types of projects referenced above. Some examples of recent changes to the design standards required by Title III impact access routes and paths, parking, restrooms, stairs, pools, areas of recreation, ATMs and other major building components. Most standard form construction contracts suffer from a variety of key omissions and deficiencies related to protections against non-compliance with Title III requirements. The following are just some examples of what most industry form contracts do not address:
Applicable Standard of Care and Warranty. Generally, standard form contracts do not specifically and sufficiently state the standard of care to be applied to contractors. Without an express standard of care provided in the construction contract, the law will imply one – which may not be what was intended by the parties and may not include strict compliance with Title III requirements. Likewise, a contract should contain an explicit warranty that all construction will be done in conformity with ADA requirements, including the latest design standards.
Adequate Insurance Coverage and Deductibles. Every project is unique and certain ADA requirements may apply depending upon the project's design and the type of public use. Therefore, the type and amount of insurance coverage and amount of deductible for large and complex construction projects should always be reviewed by an insurance advisor and an attorney, particularly to ensure that there is adequate coverage in the event of a failure to comply with Title III requirements on the project. For example, the amount of a contractor's liability insurance is essential to an owner, and project-specific insurance provisions should be addressed, including the type of policy, evidence of procurement of insurance, obligations of subcontractors and coverage exclusions. Further, it is insufficient to only require a set dollar amount of coverage. Rather, the contract should spell out that the required policy cover failure to design the building elements in conformity with ADA design standards.
Change Orders. Most standard construction contracts fail to address appropriate change order procedures to make certain that the owner receives the work it requires, and the contractor is paid for providing additional work requested. An appropriate change order provision is essential, especially if the project design calls for certain building department interpretations of the ADA requirements that could result in a change of design during the construction process. Courts do not interpret change order clauses or the course of dealings between the parties uniformly. In that regard, a well-written contract should include, among other things, provisions making clear that change orders: (a) must be in writing, (b) state the scope of any changes in the work as well as the time and cost impacts, (c) include the party responsible for the change, (d) be signed by the owner, architect and contractor, and (e) that all change orders will be compliant with ADA obligations.
Escalation Clauses. Standard form contracts generally do not include an escalation or "price adjustment" clause, which allows the contract price to move upward and downward in the event of specified price fluctuations in building materials, such as additional steel, concrete or lumber that may be required to meet unanticipated ADA requirements or building department interpretations. A properly drafted escalation clause may prevent a contractor from declining to bid on a project and may also avoid litigation or arbitration arising from a contractor's decision to walk away from a job that has become too expensive due to a building department's interpretations of the ADA requirements. The price adjustment can be limited so each party knows its total exposure.
Adequate Indemnification and Hold Harmless Provisions. Standard form contracts generally do not allow parties to a construction contract to properly shift the risks of a project in accordance with their needs. An owner may require indemnification language which obligates the contractor to indemnify the owner and its architect from claims or losses resulting from performance of the contractor's work. Contractors, however, may be wary of agreeing to a broadly phrased indemnification provision, particularly one which requires indemnification for acts that are not their own. For instance, Florida law allows, in certain instances, an owner to recover indemnification from a contractor for damages incurred due to ADA deficient plans. In some cases, the contractor may wish to seek indemnification and a hold harmless provision from the owner in the event the design professional has failed to include proper ADA design requirements in the project plans and specifications and/or the owner decides not to follow the Contractor or design professional's guidance on ADA requirements in the site plan. Owners and contractors can protect their interests and properly shift the ADA design and construction risks on a project by carefully drafting specific indemnification and hold harmless provisions that comply with Florida law (i.e., Section 725.06, Florida Statutes, relating to construction contracts and limitations on indemnification).
Because no two projects are exactly alike, industry form contracts typically cannot properly protect the parties from the risks associated with the ADA Title III design and construction requirements. Accordingly, an attorney who specializes in construction and has knowledge of the ADA's requirements should be consulted before entering into a construction contract.
About the Authors
Stacy Bercun Bohm, a shareholder at Akerman Senterfitt in Fort Lauderdale, is certified by The Florida Bar in construction law and is a LEED® Accredited Professional. She is one of the first lawyers in the State of Florida to achieve both Board Certification and LEED accreditation. She focuses her practice on drafting and negotiating complex construction, design and development contracts, construction and real estate litigation, indoor air quality, and project development and administration matters.
Arlene Kline, of counsel at Akerman Senterfitt in West Palm Beach, focuses her practice on litigation and counseling in labor and employment matters, and compliance with the public accommodation provisions of the Americans with Disabilities Act. Arlene has experience handling appeals in both state and federal courts. Her broad litigation experience includes defense at all levels under Title VII, Section 1981, the ADEA, the FLSA, the ADA, the FMLA, the PDA, and the Florida Civil Rights Act. In addition, Arlene has experience litigating under Florida's restrictions on unfair competition and trade secrets.