AOD PUBLISHES STANDARD FORM AGREEMENT

Associated Owners and Developers (AOD) will publish this year the AOD 2000 - Standard Form of Agreement between Owner and Contractor where the Price is Lump Sum (the Agreement). The Agreement is the first in a series of standard form construction documents that AOD will soon make available for use throughout the industry.

The Agreement will change the way in which standard form agreements are used on construction projects, according to Ira Genberg, AODís general counsel and chairman of the overseeing committee for the drafting of the Agreement. Genberg leads the construction law and litigation department at Smith, Gambrell & Russell, LLP, the century-old Atlanta law firm that drafted the Agreement.

Genberg explains that, Our approach in drafting the Agreement was to learn from the past with a view toward the future. We took a hard look at the provisions in other standard form agreements, and asked how we could better promote the success of the project and the interests of all parties involved. We wanted a standard form contract that is both project driven and fundamentally fair to the parties.

This approach led to many innovations, including the use of a menu system that provides the building team with a choice in how they address some of the more commonly negotiated contract provisions. The menu system allows the parties to review several alternate provisions and select the standard provision that best fits the project and their concerns. As a result, said parties can customize the Agreement using standard form language. Other standard form agreements may be customized only by using non-standard language, which often leads to inconsistencies, prolonged negotiations, and uncertainty as to the legal interpretation of such language.

Despite allowing customization, the Agreement does not fundamentally alter the traditional balance of risk between parties. Traditionally, risk is assigned to the party best able to manage it. However, while other standard form agreements have increasingly shifted more risk to the Owner, the AOD Agreement does not automatically assign to the Owner risks that cannot be fairly assigned to other parties. Rather, the Agreement splits these risks between the parties.

The Agreement, says Genberg, is in its final review with the AOD Steering Committee and will be published in the near future for widespread public distribution. AODís Cost-Plus a Fee with a Guaranteed Maximum Price Agreement will be made available to the public a few weeks later.

For more information on AOD 2000 contracts, please contact Ira Genberg at tel.404-815-3638 or e-mail igenberg@sgrlaw.com

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