Masonry Magazine December 1997 Page. 15
Helpful changes in the 1997 edition of AIA
Document A401 Subcontract
Makes the current A201 General Conditions a part of A401 by reference, except when in conflict with specific contract terms. This facilitates flow through of A201 benefits and is especially helpful when substituting an A401 subcontract on a job where General Conditions other than A201 apply.
Obligates the contractor to make owner-supplied information available promptly to subcontractors. This would include owner evidence of adequate project financing and any owner notices of material changes in their financial arrangements required by A201 2.2.1.
Requires that a contractor respond in 30 days or less to subcontractor requests for title information and identification of owner's interest in the property. This information must be in enough detail for subcontractors to evaluate, give notices and enforce their lien rights.
Enables subcontractors to obtain information from the contractor about subcontractor and owner claims against one another that are either asserted through or being defended by the contractor.
Requires that the contractor not only give subcontractors seven days' prior written notice (except in emergencies) but that back-charges must be billed no later than the 15th day of the following month to be valid. This offers protection against after-the-fact backcharges asserted near the end of a job to offset legitimate subcontractor extras.
Entitles a subcontractor to a time extension and price increase to cover additional costs of shut-down, delay and start-up if its work is stopped due to hazardous materials or substances.
Obligates the contractor to indemnify the subcontractor against hazardous materials-related losses unless the loss is caused solely by the subcontractor's negligence. This shields subcontractors from liability where joint or contributory negligence is alleged.
Clarifies that contractors are entitled to charge clean up costs to subcontractors only if seven days' prior written notice is given and details of charges are furnished by the 15th day of the following month.
Requires mediation prior to arbitration or court action. Mediation, which is non- binding on the parties, has nevertheless worked well to resolve construction disputes quicker and less expensively than either arbitration or lawsuits.
Entitles subcontractors to payment for work executed, termination-related costs and reasonable overhead and profit on work not executed if the owner terminates its contract with the contractor for the owner's convenience.
Entitles subcontractors to equitable adjustments in time and price if the contractor suspends, delays or interrupts subcontract work for the contractor's convenience. Subcontractors are specifically authorized to include profit on the increased cost of performance for these suspensions, delays and interruptions.
Requires the owner to assume the contractor's obligations to the subcontractor if the contractor assigns a subcontract to the owner upon termination of the prime contract.
Clarifies that time is of the essence for contractor obligations as well as for subcontractor obligations. This helps to establish subcontractors' claim entitlements for additional costs due to delays caused by the contractor.
Confirms that moneys paid by an owner to a contractor for subcontract work represent trust funds in that the contractor is obligated to hold such moneys for payment to the subcontractors. This provision is intended to shield subcontractors from demands by bankruptcy trustees for return of payments received within 90 days of a general contractor's bankruptcy. The same protections are afforded to sub-subcontractors and suppliers for money paid to a subcontractor for their work.
Entitles subcontractor to bill monthly for amounts not in dispute covering extra work authorized by the contractor but not yet confirmed by a change order. This important change offers clear authority for such billing whereas prior A401 language treated this as being optional and limited the billing to work done pursuant to a Construction Change Directive.
Authorizes subcontractors to bill monthly for material stored off-site with the approval of the contractor. Previously such billing was permitted only if the off-site storage had been approved in advance, and in writing, by the owner.
Obligates the contractor to provide written notice to subcontractors each time their monthly payment applications are not approved in full by the contractor. Further, subcontractors are to be paid the amounts withheld when the basis for disapproval has been remedied.