4 Clauses For Every Heavy Equipment Contractor To Know

The responsibilities of contractors are not just limited to managing heavy-moving machinery or a fleet of laborers. But contractors are bound by legal contracts and any change or unread clause can bring them and their project into great trouble.

To save you from losing any consignment or a project we have compiled 4 critical clauses.

Take out your notepad and jot down the clauses as we begin; 

1. Liquidated Damage

Liquidated damages cover the sum of per day delay caused in a project and it is unable to be completed in time. However, contractors do consider liquidated damages as anathema. Through these clauses, one can detect inexcusable delays.

It helps in pricing and analyzing the overall project including the heavy moving machinery cost. In case the contract has an enforceable clause for liquidated damage, the developer can’t charge for extra delays.

So it’s necessary to properly draft these clauses in order to save time, extra expense, and inconvenience for both parties. Additionally, a heavy equipment contractor also has the right to negotiate a cap as per the liquidated damages.

2. Changes

Through the changes clause, one party like the developer gets the right to unilaterally change the contractor’s performance and it doesn’t count as a breach of the contract.

This clause helps contractors and their teams to identify the underlying delay causes with the flexibility to adapt the onsite conditions efficiently.

Developers can modify the project requirements to omit errors as per the conditions. In return, the contractor can go for an equitable adjustment to blend in with the changes or compensate additional tasks.

However, the contractor must look for the following things in a change clause provided by the developer;

• The developer must provide an accurate and detailed description of the required changes based on complete written authorization
• The clause must address both the deductive as well as additive modifications. So the developer must provide a detailed report evaluating the value and intensity of changes required
• A proper settlement between contractor and developer where the contractor will give notice if modified operations and similar areas of concern
• An unbiased pricing detail and clear direction to execute the changes including contractor’s markups
• An approach that covers the pros, cons, and side effects of the changes in the financial budget

3. Termination

There are generally two types of clauses that can lead to the termination of any consignment or construction operation: termination for convenience and termination for default. Both of these causes have different contexts for the developer as well as the contractor respectively.

Termination for Default (T4D)

Termination for default has a lasting effect on the contractor which will come under his record of projects. The contractor must ensure that if it’s a T4D it should have adequate notice, default to being material-based, and a reasonable choice to overcome the default within a reasonable time is given.

Moreover, it should also highlight the points of how a contractor has breached the contract. And how he can mitigate it in due time without depreciating his heavy-moving machinery involved in the project.

Termination for Convenience (T4C)

Termination for convenience is all about a developer or other party terminating the contract at his own convenience while defaulting the contractor. The developer must put forward the details of opting for T4C.

Similarly, the contractor has the right to make financial adjustments with the developer. He can ask for a portion of the terminated project’s budget or a full amount whatever suits him best.

Both the developer and the contractor can come to a common ground and select reimbursement options that work in their favor. A contractor can find ways to prevent loss of his heavy moving machinery productivity or set inventory budget.

Moreover, a contractor also has the right to go for a conversion case. By this means, he can convert a T4D into a T4C in case the T4D is imposed wrongfully.

4. No Damages for Delay

It is an attempt by the developer to limit the overall exposure of an involved contractor in case of project delay by a developer of a similar authority. This clause limits the recovery of the contractor’s budget and the developer limits it to the project completion duration.

Mainly the intent of this clause is to mitigate and prevent monetary risk due to a delay by the developer to the contractor regardless of the delay causes.

Takeaway

A construction project, a heavy-moving machinery consignment, or an inventory upgrade all these conditions involve legal contact between the two involved parties.

This legal contract has critical clauses that each contractor must know to prevent his and his inventory’s loss. The clauses are specific to the content and timing of the project.

The developer must give prior notice in terms to attain any claim or change of clause in order to avoid project failure.

Nonetheless, adding legal aid is always a wise investment to save uncertain expenses as well as saving contractors from a bad market reputation in the future.