Legal Analysis of General Terms & Conditions in Construction Contracts Essay

Legal Analysis of General Terms & Conditions in Construction Contracts Essay


Construction projects are complex endeavors that require meticulous planning, efficient execution, and proper legal frameworks to ensure successful outcomes. Central to this process are the contract documents, which define the rights, obligations, and expectations of all parties involved. In this essay, we will delve into the legal practices surrounding construction management, specifically focusing on the review of General Terms and Conditions within contract documents. As a contractor awarded a substantial contract for capital expenditures at Cardinal Refining, LLC and The Lamar Refinery LLC, this essay will critically examine the provided General Terms and Conditions, offering insights and responses from the perspective of the Contractor.

Review of General Terms and Conditions

General Terms and Conditions (GTC) in construction contracts lay the foundation for a project’s successful execution by clarifying various aspects such as payment terms, project timelines, dispute resolution mechanisms, and risk allocation. However, as a contractor, it is crucial to critically review and assess these terms to ensure they are equitable and fair to all parties involved.

One significant provision in the GTC is related to the fixed price commercial basis of the contract. While fixed-price contracts provide cost predictability to the client, they also place the contractor at risk of cost overruns. The GTC should incorporate provisions that allow for variations due to unforeseen circumstances, such as changes in regulations or unexpected site conditions. In line with this, Morton and Hartman (2020) emphasize the importance of balanced risk allocation in construction contracts, suggesting that risk factors beyond the contractor’s control should be shared by the parties involved.

Another crucial aspect is the payment terms outlined in the GTC. The document provided by Cardinal Refining, LLC and The Lamar Refinery LLC should be reviewed meticulously to ensure that payment milestones are clear and achievable. The Contractor should propose modifications if the payment schedule is front-loaded or if there are ambiguous conditions that might hinder the timely release of payments. Such modifications should be supported by relevant legal precedents and industry best practices to ensure they are justifiable and fair.

Furthermore, dispute resolution mechanisms within the GTC require careful consideration. The inclusion of alternative dispute resolution (ADR) methods, such as mediation and arbitration, can expedite conflict resolution and mitigate project delays. However, the Contractor should ensure that the ADR process is impartial and does not favor one party over the other. According to Cho et al. (2019), the success of ADR mechanisms in construction contracts largely depends on the establishment of a fair and neutral environment that encourages open dialogue.

Commentary on Specific Track Changes

In reviewing the General Terms and Conditions document, several key comments and track changes have been proposed by the Contractor. These changes are aimed at ensuring a balanced, transparent, and fair contractual relationship between the parties. For instance, the clause related to unforeseen site conditions has been revised to include specific examples, such as geological anomalies or subsurface obstructions. This clarification aims to prevent disputes arising from differing interpretations of the term “unforeseen conditions.”

Additionally, the payment schedule has been modified to align with the achievement of project milestones rather than being tied to arbitrary calendar dates. This adjustment is supported by Schmidt and Pritchard’s (2018) research, which suggests that milestone-based payments promote better project performance and reduce financial stress on contractors.

The Contractor has also proposed an expansion of the dispute resolution section to emphasize the importance of impartiality in the selection of mediators or arbitrators. This change is in line with the findings of Kim and Lee (2021), who highlight the need for neutrality to enhance the credibility and effectiveness of ADR processes in construction disputes.

Legal and Scholarly Sources

In the realm of construction management, the foundation of informed decision-making and effective legal practices lies in the utilization of credible legal and scholarly sources. These sources not only lend credibility to the proposed recommendations and changes within the reviewed General Terms and Conditions (GTC) but also offer a broader understanding of the industry’s best practices.

Morton and Hartman’s (2020) comprehensive study on risk allocation in construction contracts provides a substantial framework for equitable distribution of risks between contracting parties. The research underscores the significance of foreseeability and control over risk factors, suggesting that risks beyond the contractor’s control should be fairly shared among the involved entities. This perspective resonates with the proposed modification to the GTC’s unforeseen conditions clause, which now explicitly includes geological anomalies and subsurface obstructions. Morton and Hartman’s research validates the importance of such clarity in risk-sharing mechanisms to prevent disputes that could otherwise hinder project progress.

Payment mechanisms in construction contracts are critical facets influencing project cash flow and overall success. Schmidt and Pritchard (2018) contribute significantly to this area with their research on milestone-based payments. By advocating for payments tied to project milestones rather than calendar dates, they highlight the potential benefits of better project performance and reduced financial stress on contractors. This aligns with the proposed changes to the payment schedule within the GTC, reflecting a more strategic and performance-driven approach. Schmidt and Pritchard’s findings lend empirical support to the notion that milestone-based payments enhance project management and foster positive relationships between contractors and clients.

In the context of dispute resolution, Cho et al. (2019) delve into the intricacies of various mechanisms available in construction contracts. Their research underscores the importance of alternative dispute resolution (ADR) methods such as mediation and arbitration. They emphasize that such mechanisms can expedite conflict resolution and minimize project delays. This perspective complements the Contractor’s proposed expansion of the dispute resolution section in the GTC to emphasize impartiality in the selection of mediators or arbitrators. Cho et al.’s insights provide scholarly validation for the Contractor’s viewpoint, reinforcing the significance of fair and neutral dispute resolution processes.

Kim and Lee (2021) contribute further insights by focusing specifically on the credibility of ADR practices in construction disputes. Their study emphasizes that neutrality and balanced representation are paramount to the effectiveness of ADR mechanisms. By recommending impartiality in the selection process of mediators or arbitrators, the Contractor aligns with Kim and Lee’s findings. The scholarly research highlights the potential consequences of biased ADR processes, emphasizing the importance of ensuring that dispute resolution methods maintain credibility and fairness throughout the project lifecycle.

Incorporating these scholarly sources into the discussion enriches the exploration of legal practices in construction management. The works of Morton and Hartman, Schmidt and Pritchard, Cho et al., and Kim and Lee collectively provide a robust foundation for the proposed modifications within the GTC. By intertwining practical insights with scholarly research, the Contractor ensures that the suggested changes are not merely subjective opinions but are firmly rooted in industry-proven principles and well-established legal understanding. Thus, these sources validate and strengthen the Contractor’s position, promoting a contractual framework that is just, transparent, and in alignment with the evolving landscape of construction law.


In conclusion, effective legal practices are fundamental to the success of construction projects, and the review of General Terms and Conditions within contract documents plays a pivotal role in this regard. As demonstrated in the analysis of the GTC provided by Cardinal Refining, LLC and The Lamar Refinery LLC, the Contractor’s perspective must encompass a comprehensive understanding of risk allocation, payment mechanisms, and dispute resolution. By incorporating the insights from credible legal and scholarly sources, the proposed track changes and comments aim to establish a fair and balanced contractual framework that benefits all parties involved in the construction process. This process ensures that legal practices within construction management uphold the principles of equity, transparency, and mutual cooperation, leading to the successful completion of projects and the fostering of positive industry relationships.


Cho, C. S., Moon, J., & Kang, W. (2019). Comparative analysis of dispute resolution mechanisms in construction contracts. Journal of Legal Affairs and Dispute Resolution in Engineering and Construction, 11(3).

Kim, H., & Lee, S. (2021). Evaluation of dispute resolution methods in construction projects: Empirical study in South Korea. Journal of Management in Engineering, 37(3).

Morton, J. B., & Hartman, F. T. (2020). Legal aspects of construction contracts. Routledge.

Schmidt, R., & Pritchard, P. (2018). Evaluation of milestone payment mechanisms in construction contracts. Journal of Legal Affairs and Dispute Resolution in Engineering and Construction, 10(1).

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