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Ask The Expert: The Price of Risk Transfer and One-Sided Provisions in Construction Contracts.

Published: 09 Nov 2017 Average Rating: 3 / 5 Print
 

Author: Ross Altman

The natural inclination when drafting and negotiating a construction contract is to transfer as much risk as possible to the other party. Although benefit might be derived from risk transfer, there often is a price to be paid or absorbed for that privilege. That price needs to be evaluated, as it may outweigh the value of risk transfer, particular if terms are perceived as one-sided and, therefore, fundamentally unfair. Parties to a construction contract may want to consider an allocation of risk that is more balanced, and also use the contract as a tool to facilitate project success. Results of a recent informal survey on the topic conducted by the American College of Construction Lawyers seem to reinforce that proposition and will be summarized.

 

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