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Construction is an industry with a long history that stretches back thousands of years. Over time, the industry developed its own specialized language. Indeed, the 鈥淥xford Dictionary of Construction, Surveying and Civil Engineering鈥� has more than 8,000 entries. Not to be outdone, the legal industry similarly developed its own specialized language. The leading law dictionary, 鈥淏lack鈥檚 Law Dictionary鈥� (12th edition), contains definitions for over 65,000 legal terms. These two specialized languages meet in construction contracts, which are rife with legal and construction jargon.

Terms like change order, submittal, superintendent, and substantial completion are familiar to construction industry professionals. However, legal terms may not be as familiar. To address the perceived excessive use of legal jargon, there is a movement urging lawyers to draft documents in 鈥減lain English.鈥� Documents written in plain English generally have shorter sentences, include commonly understood words, and avoid the use of arcane Latin and French legal terms. The goal of this movement is to create clear, concise legal documents that the average nonlawyer can understand.

Although the plain English movement has gained momentum, lawyers are generally risk averse and reluctant to deviate from past precedent in their legal writing. In some cases, lawyers intentionally introduce vagueness and ambiguity in contracts, with the belief that doing so is advantageous to their client. It is likely that, for the foreseeable future, legal documents will include some measure of legal jargon. This article focuses on several commonly misunderstood legal terms found in modern construction contracts.

Pro tanto

The first of two Latin phrases in this list, pro tanto means 鈥渢o that extent.鈥� It is often used in construction lien waivers when the intent is for the lien claimant to waive its lien to the extent of payment. Enforceability of a written waiver often hinges on whether the party understands which rights are being waived. As a result, using the term pro tanto (which is likely not familiar to the average person) may create enforceability issues. The better practice is to ditch the Latin phrase in favor of 鈥渢o the extent.鈥�

Force majeure

鈥淪uperior force鈥� is the literal translation from French. In contracts, it generally refers to an event or impact that is outside the control of the contracting parties and could not be anticipated. However, if used, this term usually is expressly defined in the contract, meaning the parties have agreed to their own definition for purposes of their contract. Parties often draft force majeure definitions that narrow or broaden its general meaning to favor their role in the project. It is therefore important to read and understand the particular definition for this term as used in each contract.

Mutatis mutandis

Although less commonly used, this Latin phrase means 鈥渕aking all necessary changes.鈥� It is typically used when parties enter into multiple contracts. They use mutatis mutandis to carry forward certain terms in a previous contract to the current contract, while making necessary changes to reflect the current business deal. Before the use of computers, this shorthand approach was convenient because it avoided having to restate the entire contract. However, it begs the question: What are the necessary changes? The better practice is to avoid using this phrase, save the previous contract as a new version, and update it to include the necessary changes in the current contract.

Indemnify

Indemnify means 鈥渢o reimburse another for a loss.鈥� In contracts, it is used at the beginning of a lengthy sentence describing the types of losses and circumstances under which one party will pay the other for a loss. If you struggle with the word indemnify, one way to simplify it is to think 鈥減ay鈥� when you see it in a sentence. Although substituting 鈥減ay鈥� is an oversimplification and does not capture the term鈥檚 nuanced legal meaning, it can be helpful to a nonlawyer in understanding the meaning of an indemnification provision.

Mediation and arbitration

Because they often appear in the same section of a construction contract, these terms are commonly mistaken for each other. Mediation is a dispute resolution process in which a neutral third party works with the disputing parties to help them reach a negotiated resolution. Arbitration is a dispute resolution process in which one or more neutral third parties issue a binding decision about the issues in dispute.

Warranty

A warranty is an express or implied promise in a contract that relates to a fact concerning the subject matter of a contract. Warranties are typically express or implied promises that certain facts are or will be true. A typical construction contract warranty states that the contractor warrants that the work will be performed in a 鈥済ood and workmanlike manner.鈥� In the construction industry, the term warranty is frequently conflated with the contractor鈥檚 one-year corrective obligation, which is a separate performance obligation unrelated to the warranty.

Time is of the essence

At first glance, this phrase may appear harmless. It is used in everyday speech and possesses a common meaning that is different from its legal meaning. In common speech, it means that something must be done immediately. However, its technical legal meaning is much more significant. In a contract, 鈥渢ime is of the essence鈥� means that the timely performance of an obligation is so important that a failure to meet the stated deadline constitutes a material breach, allowing the other party to terminate or rescind the contract.

Although drafting legal documents in plain English is a worthy goal, the legal industry is historically slow to change. In the meantime, it is important for construction professionals to read and understand what the fine 鈥� and arcane 鈥� print means in the contracts governing their legal relationships. In doing so, you will be in a better position to understand and manage projects鈥� risk.

Sean Gay is a Stoel Rives LLP partner and a member of the construction and design practice group in the firm鈥檚 Portland office. Contact him at 503-294-9239 or [email protected].

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91视频 guarantees the accuracy or completeness of any information published herein.