Killer Clauses

Killer Contract Clauses- How do you spot them and how do you know if they are deal breakers?

Any contract clauses that have oppressive terms such as:

•Unrealistic liquidated damages
•Terms that shift the responsibility for mistakes of others onto you
•Terms that place responsibility beyond your control onto you
•Terms that lock you into cost overruns without your ability to seek compensation
•Terms that prevent you from getting paid on time (pay if paid clause) and place conditions on getting paid that are beyond your control
•Terms that prevent you from demobilizing if progress stalls

There may be more terms that are unique to each project that have to be analyzed for the exposure to risk.

Once the clauses have been identified, they should be evaluated on their potential risk. If they cannot be removed, then a conscious plan for managing the risk should be implemented. If the risk is too great, it might be a good idea to walk away from the work and look for more favorable projects.

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