Contracting with Confidence: Informed Consent

Understanding Terms and Conditions

Terms and Conditions of a contract refer to the specific rules, requirements, and provisions that govern the legal agreement between two or more parties. These terms and conditions may include a wide range of provisions, such as payment terms, delivery schedules, warranties, limitations of liability, dispute resolution procedures, and termination clauses.

In a typical contract, the terms and conditions serve as the framework for the parties to agree upon and execute the agreement's details. They help define the scope and limitations of the agreement and provide a reference point in case of any dispute or disagreement that may arise during the contract.

The terms and conditions are typically included in a written contract. Both parties often negotiate and agree upon them before signing the agreement. They are legally binding and enforceable, and failure to comply can result in legal action or termination of the contract.

It's essential for all parties involved in a contract to carefully review and understand the terms and conditions before agreeing to them. If any terms are unclear or ambiguous, seeking legal advice is important to avoid potential conflicts or misunderstandings.

The issue of Informed Consent is at the heart of understanding the terms and conditions of a contract.

Informed Consent

Informed consent is an ethical and legal principle that requires individuals to be fully informed of the risks and benefits of a decision or action before they can consent. In the construction sector context, informed consent is particularly relevant to contractors who must sign contracts with clients before undertaking a project.

It is not uncommon for contractors to sign contracts without fully understanding the terms and conditions. This can be due to various reasons, such as tight deadlines, lack of legal expertise, or pressure to secure work. However, signing a contract without understanding its terms and conditions can expose contractors to significant risks, such as liability for defects or delays, financial penalties, or loss of reputation.

Clients have an obligation to ensure that contractors are fully informed of the risks and duties associated with a project before signing a contract. This can involve providing detailed project specifications, timelines, budgets, and performance metrics and highlighting any potential risks or liabilities. Clients should also be transparent about their expectations, communication channels, and dispute-resolution mechanisms.

To ensure informed consent, clients and contractors should communicate openly and transparently throughout the contracting process. This can involve negotiating and clarifying contract terms, seeking legal advice, and addressing any concerns or questions. By working together to ensure mutual understanding and agreement, clients and contractors can minimize the risks of misunderstandings, disputes, and legal challenges down the line.

Case Studies

There are cases where the absence of informed consent has led to contractors being relieved of liability to complete a contract or being awarded damages for breach of contract. Here are a few examples:

• New York City Housing Authority: In 2018, the New York City Housing Authority (NYCHA) sued three contractors for breach of contract and negligence in connection with a $100 million boiler replacement project. The contractors argued that they were not provided with sufficient information about the scope and complexity of the project and that the NYCHA failed to obtain necessary permits and approvals. The court ultimately found that the contractors were not liable for breach of contract because the NYCHA had failed to provide informed consent.
• Vancouver Island Health Authority: In 2014, a contractor hired by the Vancouver Island Health Authority (VIHA) to build a hospital in British Columbia filed a lawsuit against VIHA for breach of contract and negligence. The contractor claimed that VIHA had failed to provide accurate and complete information about the project, resulting in significant delays and cost overruns. The court ultimately found in favor of the contractor, ruling that VIHA had failed to obtain informed consent and awarding damages.
• Brown University: In 2016, a contractor hired by Brown University in Rhode Island filed a lawsuit against the university alleging breach of contract and fraud. The contractor claimed that the university had failed to provide accurate and complete information about the scope and timing of the project, which caused significant delays and cost overruns. The court ultimately found in favor of the contractor, ruling that the university had failed to obtain informed consent and awarding damages.

These cases illustrate the importance of informed consent in construction contracts and the potential consequences of failing to provide contractors with sufficient information about a project. Contractors may be relieved of liability or awarded damages if they can demonstrate that they were not adequately informed about the risks and obligations associated with a project before signing a contract.

Coming Up in Future Newsletters:

• Payment Terms
• Change Orders
• Indemnification
• Termination
• Force Majeure
• Warranty and Liability