Content Is King: Attorney Spells Out Killer Contract Clauses

Attorney Philip J. Siegel has reviewed a lot of construction contracts, and he’ll be presenting a seminar on the topic at the International Roofing Expo (IRE) in San Antonio on Tuesday, Feb. 5, 7:45 a.m. – 9:15 a.m. Siegel is a partner with Hendrick, Phillips, Salzman & Flatt, a law firm with a national practice specializing in construction law. His session at IRE, titled “Reviewing Killer Contract Clauses,” will cover the most common problems areas in contracts and suggest revisions to make the clauses more equitable for the roofing contractor. It sounded like a compelling topic, so I reached out to Siegel to get a preview of some of the issues he would cover. Some of the horror stories he shared would make your hair stand on end.

Siegel pointed to three clauses as the biggest sources of concern for roofing contractors:

1.Indemnification provision: “The indemnification provision is fairly described as a contractual clause in which I as the indemnator am agreeing to defend your company, hold your company harmless, and pay whatever damages may be assessed against your company under certain conditions,” Siegel said. “And those conditions are open to negotiation. In the most egregious indemnity clause, the roofing contractor would be responsible for defending, holding the general contractor and the owner harmless and paying damages assessed against the general contractor and owner for any damages that arise out of the contractor’s work, regardless of how caused.”

2. Additional insured requirement: “Most contracts require a subcontractor roofer to provide additional insured coverage for the general contractor and the owner,” stated Siegel. “If not properly dealt with there could be added exposure there.”

As in the case of the indemnification provision, the clause can be worded so that the roofing contractor is exposed to significant risk. “The most egregious or onerous additional insured requirement would have the roofing contractor’s insurance providing coverage for claims due to either the general contractor’s or the owner’s fault,” he said. “This is why it’s a killer contract clause. We can negotiate and revise those to make them more equitable.”

3. Pay if paid provisions.Pay if paid provisions can mean that the roofing contractor won’t get paid until and unless the general contractor gets paid. “In the roofing industry, where the roofer is acting as a subcontractor, there are pay if paid provisions. There are acceptable compromises that can be reached with that type of thing.”

“If you’re looking at a strict pay if paid, unfortunately we’ve had the case all too often where the client is not being paid by the general contractor, and the reason why is because the general contractor hasn’t been paid by the owner — and it may be the general contractor hasn’t been paid by the owner because of reasons totally unrelated to the roofing work. But even in that situation, if the contract clause allows it, then it may be that the roofer isn’t getting paid, even if the work is done and accepted.”

 Siegel will cover keys to spotting problems and negotiating fairer terms in his seminar. If you’ll be in San Antonio for IRE, I urge you to check it out. It’s information that every roofing contractor should know.