Contract Corner #17 - Dealing with Onerous Clauses

Tuesday, May 24, 2016

While previous issues of Contract Corner have dealt with specific contract provisions one may find in an agreement, this week we will provide some guidance on what to do when dealing with an onerous clause.

  1. Evaluate impact of clause:
    1. Is the clause potentially fatal to your organization, in the worst case scenario?
    2. Will the clause result in significant risks?
    3. Will higher risks result in higher costs, i.e. insurance premiums, lawyers’ fees, contingency fees, etc.?
    4. Is the owner amenable to revising Agreement?
    5. What other external aspects are there to the particular Agreement?
    6. Is the clause one that has been “red-flagged” by ACEC-BC
  2. Contact client and raise concerns, requesting use of a standard clause or acceptable modifications to offending clause.
  3. Strike out offending clause and insert more appropriate clause, thereby necessitating discussions with client.
  4. Review impact of onerous clauses, assess risk and price the risk accordingly.
  5. Walk away from the Agreement and contact ACEC-BC regarding issuing an onerous clause alert.

Members should feel free to bring their concerns to ACEC-BC by emailing info@acec-bc.ca an example of the onerous clause in question, describe its impact on engineering firms and provide a recommendation for action.  Where you may not have any recommendations, ACEC-BC will consult with the Business Practices Committee and others to develop a response to the client over ACEC-BC letterhead.

For more information on contract language visit www.acec-bc.ca/resources/contract-language/

The Board of Directors of ACEC-BC has identified unfair contracts and onerous clauses as serious problems facing the consulting engineering community. "Contract Corner” provides some ideas and guidance on these issues.

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