With reference to Article 2, the Committee has been informed that the provision for liquidated damages has not always been upheld in the courts, and considers that it would be highly advisable to indicate definite damages which would result from any particular delay. In Article 4, the last paragraph should be revised to comply with the local laws and to conform to the intentions of the contracting board. Bond: As written, Article 30 of the General Conditions provides for the filing of an indemnity bond. On this matter there is some division of opinion as to the best practice. It appears that many municipalities are now writing a form of bond into the agreement, the agreement then being signed both by the contractor and by the surety as principals. This practice was commended by the Committee, but inasmuch as it was not now universal, the form of bond has not been included in the agreement herewith. LOCAL LAWS. In Article 11, of the General Conditions, the contractor is required to inform himself of and to comply with local laws, ordinances, and regulations pertinent to the work. It would be advisable to insert at this point reference to specific laws and ordinances affecting the work; in fact state laws and municipal ordinances often require the insertion of particular provisions in contracts. For instance, a common form of ordinance, states, "That all contracts shall contain the provision. that the payments hereunder shall be limited to the amount appropriated by ordinance for the particular purpose.' Another example is the law of a state, which recites that, "All contracts shall contain the provision that the materials specified shall be products of the forest, quarries, and mines of the state, if the same can be furnished. on as favorable terms and of equal quality." ARBITRATION. There has been a demand in some quarters for an arbitration clause in municipal contracts. It appears upon investigation that such a clause would be illegal in many cities for the reason that the constituted authority has no right to delegate either this authority or its discretion to any unofficial body not provided for by general statutes. The committee has not, therefore, provided for arbitration in the usual manner, but in order to insure against arbitrary decisions by minor officials, has inserted a clause for "Reviews of Decisions." It will be noted that this clause provides for full investigation and hearing but leaves the final determination in the hands of the municipal body. Where, however, a City desires to insert an arbitration clause in the municipal contract, the form given in Appendix "A" is recommended. For Respectfully submitted, The American Society for Muni- E. S. Rankin, Engineer, Bureau Geo. W. Tillson, Consulting gineer, Milwaukee, Wisconsin. John B. Hittell, Street Engineer, Chicago, Illinois. Geo. C. Warren, Pres. Warren W. W. Horner, Chief Engineer, For Associated General Contractors of J. H. Ellison, V.-P., Winston-Dear J. W. Cowper, Pres., John W. W. W. Horner, Chairman, Ward P. Christie, Secretary. Appendix "A". Form of arbitration clause to replace Articles 39 and 40, where provisions for arbitration are desired and where they may be legally adopted. Article 39. Engineer's Decisions: The engineer shall decide all questions which may arise relative to the performance of this contract and when requested by the contractor shall render any decision in writing. Decisions of the engineer shall be final except in cases where time or financial considerations are involved, which, if no agreement in regards thereto is reached, shall be subject to arbitration. Article 40. Arbitration. All questions subject to arbitration under this contract shall be submitted to arbitration at the choice of either party to the dispute. The Contractor shall not cause a delay of the work during any arbitration proceedings, except by agreement with the City. The demand for arbitration shall be filed in writing with the Engineer, in the case of an appeal from his decision, within ten days. of its receipt and in any other case within a reasonable time after cause thereof and in no case later than the time of final payment, except as otherwise expressly stipulated in the Contract. If the Engineer fails to make a decision within a reasonable time, an appeal to arbitration may be taken as if his decision had been rendered against the party appealing. No one shall be nominated or act as an arbitrator who is in any way financially interested in this Contract or in the business affairs of either the City or Contractor. Unless otherwise provided by controlling statutes, the parties may agree upon one arbitrator; otherwise there shall be three, one named in writing, by each party to this contract, to the other party and to the Engineer and the third chosen by these two arbitrators, or if they fail to select a third within fifteen days, then he shall be chosen by the presiding officer of the Bar Association nearest to the location of the work. Should the party demanding arbitration fail to name an arbitrator within ten days of his demand, his right to arbitration shall lapse. Should the other party fail to choose an arbitrator within said ten days, then such presiding officer shall appoint such arbitrator. Should either party refuse or neglect to supply the arbitrators with any papers or information demanded in writing, the arbitrators are empowered by both parties to proceed ex parte. If there be one arbitrator his decision shall be binding; if three the decision of any two shall be binding. Such decision shall be a condition precedent to any right of legal action, and wherever permitted by law it may be filed in Court to carry it into effect. The arbitrators, if they deem that the case demands it, are authorized to award to the party whose contention is sustained such sums as they shall deem proper for the time, expense and trouble incident to the appeal and, if the appeal was taken without reasonable cause, damages for delay. The arbitrators shall fix their own compensation, unless otherwise provided by agreement, and shall assess the costs and charges of the arbitration upon either or both parties. The award of the arbitrators shall be in writing and it shall not be open to objection on account of the form of the proceeding or the award, unless otherwise provided by the controlling statutes. In the event of such statutes providing on any matter covered by this article otherwise than as hereinbefore specified, the method of procedure, throughout and the legal effect of the award shall be wholly in accordance with the said statutes, it being intended hereby to lay down a principle of action to be followed, leaving its local application to be adapted to the legal requirements of the jurisdiction having authority over the arbitration. The Committee does not recommend that the contract form which follows be adopted verbatim by any municipality. It is intended for use as a guide both as to general order of subject matter and as to the general intent of the principal clauses. For use in any particular municipality, it should be carefully checked over and revised to conform with local and state laws, and in many instances its general conditions may properly be modified in order to cover more completely the outstanding details of the particular project. ......(2) authority vested in the said has awarded to the contractor the work of performing certain construction, NOW THEREFORE, the Contractor and the City for the considerations hereinafter named agree as follows: Article 1. Scope of the Work. The Contractor shall furnish all of the materials, tools, equipment, labor and everything necessary to perform, and shall perform in accordance with the plans, specifications and terms of this contract the work of (4). Article 2. Time of Completion. (5) ..... Construction work must begin within days after written notice to do so shall have been given to the Contractor, and shall be carried on at a rate to secure its full completion within (5) . calendar days thereafter, the rate of progress and the time of completion being essential conditions of this Agreement. Deductions for not Completing on Time. If the contract work is not fully completed according to the terms of the contract within the time limit herein stipulated, the contractor shall pay the City, not as penalty but as liquidated damages, a sum equal to (5) .. dollars per day for each day elapsing between expiration of such time limit and the date of full completion; provided, however, that the time limit herein stated is subject to extension without payment of damages as provided in Article 18. Notes: (1) Insert name of municipality. (2) Insert title of contract. ing board, council, etc. (3) Insert specific authority for contract such asOrdinance No. 1997. (4) Insert general statement of character and scope of work. (5) Should be filled in prior to bidding so that proposals of all bidders are submitted on the same basis. Where any deductions from or forfeitures of payment in connection with the work of this contract are duly and properly declared or imposed against the contractor, in accordance with the terms of this contract, State laws or ordinances of the City, the total amount thereof may be withheld from any money whatsoever due or to become due the contractor under the contract, and when deducted shall be deemed and taken as payment in such amount. Article 3. Approximate Quantities and Unit Prices. The City shall pay the contractor for all work included in and completed according to this contract, the prices shown in the following schedule of quantities; but it is understood that the quantities shown are only approximate and may not represent the actual amount of work to be performed. APPROXIMATE QUANTITIES AND UNIT PRICES Item of work Quantity Unit Price Amount Article 4. Progress Payments. On or before the ........ day of each month the City shall pay the contractor (6)...................... per cent of the value of all work performed less the aggregate of previous payments. Such value shall be estimated by the engineer on the basis of contract prices and the quantity of work performed. Authorized extra work shall be included in progress payments. per cent of the value Unless contrary to laws or ordinances (7)..... of materials as estimated by the engineer and suitably stored for the work shall also be included in progress payments. (8) Article 5. Acceptance and Final Payment. When the work provided for under this contract has been fully completed in accordance with the terms thereof, a final estimate showing the amount of such work shall be prepared by the engineer and filed with the City and with the contractor within thirty days after the date of completion. The final estimate shall be accompanied by a certificate of acceptance issued by the engineer and stating that the work has been fully completed to his satisfaction in substantial compliance with the contract. From the final payment shall be retained all moneys expended by the City according to the terms of this contract and thereunder chargeable to the contractor, all moneys payable to the City as liquidated damages and all deductions provided by the contract, state laws or ordinances of the City. Notes: (6) In most cities it is customary to use 85 or 90 per cent. (7) Some cities retain different percentages on materials delivered and on work performed. (8) If it is deemed inadvisable to pay for materials delivered, the second paragraph of Article 4 may be deleted. |