September 16, 2009

KEY CONTRACT TERMS TO CONSIDER BEFORE DOING BUSINESS IN MOBILE ALABAMA

Before you lift a hammer on a project, make sure that you have a written contract (prepared by a lawyer) to protect you in the event you must institute legal proceedings to collect.

Important terms are as follows:

1. Venue for disputes--This sets the location for any dispute between the parties. If you are working on a project in Mobile, Alabama--then you should have a venue paragraph that sets Mobile County, Alabama as the venue for all disputes. If you are working with an out-of-state general contractor beware of attempts by the general contractor to set venue for some other state.

2. Governing Law--This sets forth the law that will govern the dispute between the parties. Again, if working in Alabama then Alabama law should be applied.

3. Attorneys' fees--If you have to institute a collection action, you should have a paragraph in your contract that entitles you to attorneys' fees incurred as a result of hiring a lawyer to help you collect.

4. Dispute Resolution--You can decide to have your disputes resolved in Court or before an Arbitrator. Good arguments for both forums exist, but overall I think the Courts are the best forum. You already pay taxes to fund a court system, why pay an arbitrator by the hour to resolve your dispute?

**If you'd like to have a written contract prepared by our firm please give us a call and we'd be happy to meet with you to discuss your needs.

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June 19, 2008

Indemnity Clause within Construction Contracts

Indemnity is an undertaking whereby one agrees to indemnify another upon the occurrence of an anticipated loss. For example, as a general contractor you should require your plumber to indemnify you (via contract) for any loss caused by a defect in his work. Put simply, if you receive a complaint alleging defective plumbing the plumber must assume your defense as it pertains to his work and any resulting damage.

In Alabama, two types of indemnity obligations exist, common law and contractual. Here, we deal with contractual indemnity. Essentially, the subcontractor is required (under contract) to bear the loss associated with identified perils (personal injury, death, damage to property, etc.) that could be attributed to the general contractor. Most often the indemnity provision will request that the subcontractor also cover the cost of defense (attorney fees, etc.) as a result of claims made against the general contractor. Note, in Alabama, such provisions are carefully scrutinized by our courts, and such an agreement is enforceable only if the provision is “unambiguous and unequivocal.” Further, ambiguous language in an indemnity agreement is always construed against the drafter.

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