2.4.1 What makes a contract valid

A contract is a promise the law will enforce. The Business and Finance exam expects you to know the parts that every valid contract needs. If one part is missing, the deal may be void (no contract at all) or voidable (one side can cancel it).

Offer. One party proposes definite terms: what work, what price, what time. A bid on a window replacement job is an offer. An advertisement or a price list is usually only an invitation to make an offer.
Acceptance. The other party agrees to the same terms. If the owner says "yes, but only if you also replace the sliding door," that is a counteroffer. A counteroffer rejects the first offer and makes a new one. This is called the mirror image rule for service contracts.
Consideration. Each side gives something of value: the owner promises money, the contractor promises work. A promise to do something you already must do is not new consideration.
Capacity. Both parties must be legally able to contract. Minors and people judged mentally incompetent may lack capacity. A corporation acts through authorized officers.
Legal purpose. The subject must be legal. In Florida, a contract signed by an unlicensed contractor for work that needs a license is unenforceable by the unlicensed contractor under F.S. 489.128. Check the statute in Chapter 489 for the details.

Many textbooks add mutual assent (a meeting of the minds, which is offer plus acceptance) and, for some contracts, the right form (a signed writing). An offer ends by rejection, counteroffer, revocation before acceptance, lapse of time, death or incapacity of a party, or the subject being destroyed.

Express contracts are stated in words, written or spoken. Implied contracts come from conduct, for example a property manager who lets you fix ten doors and accepts the work. A bilateral contract is a promise for a promise. A unilateral contract is a promise for an act ("I will pay $500 to whoever fixes this gate today").

Where to look in the book: Contractors Manual (R50), the contract law chapter; it lists the elements of a contract and the statute of frauds.

2.4.2 Written contracts and the statute of frauds

An oral contract can be valid. But the statute of frauds says some kinds of contracts must be in a signed writing or a court will not enforce them. In Florida the general rule is F.S. 725.01. It covers, among others:

a promise to pay the debt of another person (a guarantee)
a contract to sell land or an interest in land
a lease of land for more than one year
an agreement that cannot be performed within one year from when it is made
a promise made in consideration of marriage, and a promise by an executor to pay estate debts from personal money

For goods (movable things such as windows, doors, blinds, hardware) the rule is the Uniform Commercial Code. Florida adopted UCC Article 2 as Chapter 672. Under F.S. 672.201 a contract to sell goods for $500 or more needs a writing signed by the party you want to hold to it. Exceptions:

Merchant confirmation: between merchants, a written confirmation is enough unless the receiver objects in writing within 10 days.
Specially manufactured goods: custom made impact windows that no one else can use, if the seller has started making them.
Admission in court that a contract was made.
Goods already paid for and accepted, or received and accepted.

Even when the law does not require writing, always get a written, signed contract. The Florida licensing law and the construction lien law (F.S. 713) require certain notices and disclosures in written residential contracts. Those are covered in the government regulations objectives.

Statute of limitations is a different rule. It limits how long you have to file a lawsuit. In Florida an action on a written contract generally has 5 years (F.S. 95.11(2)(b)). For construction defect claims, a 2023 law (SB 360) cut the statute of repose from 10 years to 7 years, counted from the earliest of the certificate of occupancy, temporary CO, certificate of completion, or abandonment. Separately, A201 15.1.2 says no claim may start more than 10 years after Substantial Completion. The shorter state rule still applies.

2.4.3 Breach, remedies and liquidated damages

A breach is a failure to do what the contract requires. A material breach goes to the heart of the deal, such as not paying for months or walking off the job. It lets the other side stop performing and sue. A minor (immaterial) breach, such as a small punch list item, only gives a right to damages. Anticipatory breach (repudiation) is when a party says before the due date that it will not perform.

Substantial performance: if the contractor finished the job with only small defects, it can still recover the contract price minus the cost to fix the defects.

Remedy	What it means	Construction example
Compensatory damages	Money to put the injured party where it would have been if the contract was performed	Owner pays another installer $3,000 more to finish your doors; you owe the $3,000
Consequential damages	Indirect losses that flow from the breach, such as lost rent or lost profit	Condo owner loses rental income because units were late. A201 15.1.7 waives these both ways
Liquidated damages	A fixed amount per day agreed in advance for late completion	$250 per calendar day after the completion date
Specific performance	Court orders the party to do the act. Used for unique things like land, rarely for construction services	Seller must deliver a unique lot
Rescission and restitution	Contract is undone; each side returns what it got	Contract signed under fraud is canceled and the deposit is returned
Reformation	Court corrects the writing to match what the parties really agreed	Typo in the unit price
Nominal damages	Small amount when there was a breach but no real loss	$1

Liquidated damages (LDs) are enforceable when actual damages would be hard to measure at signing and the amount is a reasonable estimate, not a penalty meant to punish. If a court sees it as a penalty it will not enforce it. A701 2.1.6 has bidders represent they have read the LD provisions in the agreement form. A701 4.2.2 says forfeited bid security is kept as liquidated damages, not as a penalty. A bonus/penalty clause pays the contractor for early finish and charges for late finish.

Duty to mitigate: the injured party must take reasonable steps to keep its losses small. Punitive damages are generally not available for a plain breach of contract; they come from torts like fraud.

2.4.4 Torts, the UCC and ways to settle disputes

A tort is a civil wrong that is not based on a contract. It is a duty everyone owes to others. Main types:

Negligence: failing to use reasonable care. Four parts: duty, breach of duty, causation, damages. Example: leaving a window opening unguarded and a worker falls.
Intentional torts: trespass, conversion (taking someone's property), fraud, defamation.
Strict liability: liability without fault, for abnormally dangerous work (blasting) or defective products.
Vicarious liability (respondeat superior): an employer is liable for torts of employees acting within the job. This is one reason you carry general liability insurance.

A tort can lead to punitive damages when conduct is reckless or intentional. Contracts often shift tort risk with an indemnification clause (A201 3.18 makes the contractor indemnify the owner and architect for claims from bodily injury or property damage caused by the contractor's negligence, to the extent caused by it).

UCC Article 2 (Florida Chapter 672) governs the sale of goods, not services. Points to know: the $500 writing rule; between merchants, a confirmation not objected to within 10 days binds; additional terms in an acceptance can become part of a contract between merchants unless material; implied warranty of merchantability (goods fit for ordinary use) and fitness for a particular purpose; buyer's right to inspect and reject nonconforming goods. A contract to supply and install windows is a mixed contract: courts look at the main purpose to decide if the UCC applies.

Method	Who decides	Binding?	Notes
Negotiation	The parties	Only if they agree	Cheapest and fastest
Mediation	Parties, helped by a neutral mediator	No, unless they sign a settlement	A201 15.3: a required step before binding resolution; administered by AAA Construction Industry Mediation Procedures unless agreed otherwise
Arbitration	Arbitrator or panel	Yes, final and binding; very limited appeal	A201 15.4 if selected in the agreement (A101); AAA Construction Industry Arbitration Rules; private
Litigation	Judge or jury	Yes, with appeal rights	Default in A201 if arbitration is not checked in the agreement; public record

In A201 2017 the parties choose arbitration, litigation, or other method in the owner contractor agreement (for example A101). If they check nothing, disputes go to litigation in a court.

2.4.5 The AIA documents and the A201 map

The American Institute of Architects (AIA) publishes standard construction contracts. The exam references three of them, and you are allowed to bring them into the test:

A201 2017 General Conditions of the Contract for Construction: the rule book for the owner, contractor and architect. It is used with an agreement form such as A101 (stipulated sum), A102 or A103 (cost plus).
A401 2017 Contractor Subcontractor Agreement: flows the A201 duties down to the sub.
A701 2018 Instructions to Bidders: how bids are prepared, delivered, withdrawn and secured.

The fastest way to answer an A201 question is to know which article holds the topic. Tab your book with these.

Article	Title	What is in it
1	General Provisions	Definitions: Contract Documents, the Work, the Project, Instruments of Service; 1.1.1 lists the documents; correlation of documents
2	Owner	Lien info 15 days (2.1.2), financing proof 14 days (2.2.2), owner's right to stop the work (2.4), owner's right to carry out the work after 10 day notice (2.5)
3	Contractor	Review of documents, supervision, labor and materials, warranty (3.5), taxes, permits, concealed conditions 14 days (3.7.4), superintendent (3.9), schedules (3.10), submittals (3.12), cleanup, indemnification (3.18)
4	Architect	Administration of the contract, site visits, certifies payments, rejects work, reviews submittals, interprets documents, prepares change orders
5	Subcontractors	Award of subcontracts, 14 day objection (5.2.1), flow down (5.3), contingent assignment to owner (5.4)
6	Construction by Owner or Separate Contractors	Owner's own forces and other prime contractors; coordination; mutual responsibility
7	Changes in the Work	Change Order (7.2), Construction Change Directive (7.3), Minor Change (7.4)
8	Time	Definitions of Contract Time, Date of Commencement, Substantial Completion; a day is a calendar day (8.1.4); delays and extensions (8.3)
9	Payments and Completion	Schedule of values (9.2), applications (9.3), certificates (9.4), withholding (9.5), progress payments (9.6), failure of payment (9.7), Substantial Completion (9.8), partial occupancy (9.9), final completion and final payment (9.10)
10	Protection of Persons and Property	Safety precautions and programs, hazardous materials, emergencies
11	Insurance and Bonds	Contractor's insurance and bonds (11.1), owner's insurance (11.2), waivers of subrogation (11.3), loss of use (11.4), settlement of insured loss (11.5)
12	Uncovering and Correction of Work	Uncovering work (12.1), correction before and after Substantial Completion including the one year period (12.2), accepting nonconforming work (12.3)
13	Miscellaneous Provisions	Governing law (where the project is), successors, rights and remedies, tests and inspections (13.4), interest (13.5)
14	Termination or Suspension of the Contract	By contractor (14.1), by owner for cause (14.2), suspension for convenience (14.3), termination for convenience (14.4)
15	Claims and Disputes	Claims (15.1), Initial Decision (15.2), mediation (15.3), arbitration (15.4)

The Contract Documents (A201 1.1.1) are the Agreement, the General Conditions, Supplementary and other Conditions, Drawings, Specifications, Addenda issued before the agreement, other listed documents, and Modifications issued after signing. A Modification is a written amendment signed by both parties, a Change Order, a Construction Change Directive, or a written order for a minor change by the architect. Bidding requirements (advertisement, instructions to bidders, sample forms, the contractor's bid) are not Contract Documents unless the agreement lists them.

2.4.6 Articles 2 to 5: owner, contractor, architect, subcontractors

Owner (Article 2). The owner must give the contractor the information needed to protect lien rights within 15 days after a written request (2.1.2). Before work starts, the contractor may ask for reasonable evidence that the owner has the money. After work starts, the contractor can ask again if the owner misses a payment, a change materially changes the price, or the contractor has a reasonable concern. If the owner does not answer within 14 days, the contractor may stop work (2.2.2). The owner provides surveys and site information. The owner may order the contractor to stop work that is defective (the owner's right to stop the work, 2.4). Under 2.5, if the contractor defaults and fails within a 10 day period after notice to start and keep correcting, the owner may correct the work itself and deduct the cost, including the architect's extra fees, by Change Order.

Contractor (Article 3). Key duties:

Study the documents and report errors it finds; the contractor is not responsible for design errors it could not reasonably find, but must report those it does find (3.2).
Supervise and direct the work and is solely responsible for means, methods, techniques, sequences and procedures (3.3.1).
Provide and pay for labor, materials, equipment, utilities; enforce discipline; no unfit workers (3.4). Substitutions only with the owner's consent after the architect's evaluation, and by Change Order.
Warranty (3.5): materials will be of good quality and new unless the documents allow otherwise; work will be free from defects. This warranty is separate from the one year correction period.
Pay sales, consumer and use taxes in effect when bids are received (3.6). Secure and pay for the building permit and other permits unless the documents say otherwise (3.7.1).
Concealed or unknown conditions (3.7.4): notify the owner and architect before disturbing them and no later than 14 days after first observing them. The 2007 edition said 21 days. The architect investigates and may recommend a change in price or time.
Human remains, burial markers, archaeological or wetland finds (3.7.5): stop that part of the work at once and notify.
Employ a competent superintendent (3.9). The architect may object within 14 days of receiving the name; silence means no objection. The contractor may not change the superintendent without the owner's consent, which may not be unreasonably withheld.
Prepare a construction schedule promptly after award (3.10.1) and a submittal schedule; keep record documents at the site (3.11).
Submittals: shop drawings, product data and samples are not Contract Documents (3.12.4). The contractor reviews and approves them before sending them to the architect.
Keep the site clean (3.15), allow access (3.16), pay royalties and patents (3.17), and indemnify the owner and architect (3.18).

Architect (Article 4). The architect administers the contract. It visits the site at intervals to learn the progress and quality of the work, but it is not required to make exhaustive or continuous inspections and has no control over means and methods or safety (4.2.2). It reviews applications for payment and issues Certificates for Payment, may reject nonconforming work, reviews submittals for conformance with design intent, prepares Change Orders and Construction Change Directives, orders minor changes, determines dates of Substantial and Final Completion, and interprets the documents. By default the architect is the Initial Decision Maker for claims (15.2.1). The owner and contractor communicate through the architect about matters arising from the contract, unless they agree otherwise.

Subcontractors (Article 5). A subcontractor has a direct contract with the contractor; a sub subcontractor works for a subcontractor. Neither has a contract with the owner. As soon as practicable after award, the contractor gives names of proposed subs and suppliers. The owner or architect may object within 14 days (5.2.1). The contractor may not use a sub the owner reasonably objects to, but if the replacement costs more, the price and time are adjusted. 5.3 flow down: each subcontract must bind the sub to the contractor the same way the contractor is bound to the owner. 5.4 contingent assignment: each subcontract is assigned to the owner if the contract is terminated and the owner accepts the assignment. If work had been suspended more than 30 days, the sub's price is equitably adjusted (5.4.2).

2.4.7 Article 7 changes and Article 8 time

A201 has three tools for changing the work after signing. The exam loves the differences.

Tool	Signed by	Changes price or time?	When used
Change Order (7.2)	Owner, Contractor and Architect	Yes, agreed amount and time	All three agree on the change, the amount and the time
Construction Change Directive, CCD (7.3)	Owner and Architect (contractor not required)	Yes, but the amount is not yet agreed	Owner needs the change done now and the price or time is in dispute or not yet known
Order for a Minor Change (7.4)	Architect (written order)	No change in price or time	Small change consistent with the design intent; binding on owner and contractor

CCD details (7.3). The contractor must proceed promptly with a CCD. The price change may be figured by mutual acceptance of a lump sum, by unit prices, by cost plus an agreed fee, or, if they cannot agree, the architect determines it on the basis of reasonable costs and savings plus an allowance for overhead and profit. When the contractor signs the CCD showing agreement, it becomes a Change Order. Pending final determination, the contractor may include undisputed amounts in Applications for Payment.

Minor changes (7.4). If the contractor thinks a "minor change" really affects price or time, it must notify the architect and not proceed with the change; if it goes ahead without notice it waives any adjustment.

Unit prices (Article 7). If quantities in a unit price contract change so much that applying the agreed unit price would cause substantial inequity to the owner or contractor, the unit prices are equitably adjusted.

Time (Article 8). Contract Time is the period from the Date of Commencement to Substantial Completion, including adjustments. Unless defined otherwise, a day is a calendar day (8.1.4). Time limits are of the essence. The contractor gets an extension of time for delays caused by the owner or architect, changes, labor disputes, fire, unusual delay in deliveries, unavoidable casualties, adverse weather documented per 15.1.6.2, or other causes beyond its control (8.3.1). An extension needs a Claim under Article 15 if not agreed by Change Order. Weather claims must show the weather was abnormal for the period, could not have been reasonably anticipated, and actually affected scheduled construction.

2.4.8 Article 9 payments and completion

Article 9 is the money article. Follow the cycle in order:

Schedule of values (9.2). For a stipulated sum or GMP contract, the contractor submits a schedule of values to the architect before the first Application for Payment. It splits the contract sum among the parts of the work (for example: mobilization, window supply, window install, door install, shutters, cleanup). Once accepted, it is the basis for reviewing applications.
Application for Payment (9.3.1). At least 10 days before each progress payment date, the contractor sends an itemized application (typically AIA G702 with continuation sheet G703), with supporting data the owner or architect requires. It may include approved Change Orders and, for CCDs, amounts not in dispute. It may not include amounts the contractor does not intend to pay a sub because of a dispute. Materials stored off site can be included only if the owner approves in advance and the contractor shows insurance, title and protection (9.3.2). The contractor warrants that title passes to the owner free of liens when paid (9.3.3).
Certificate for Payment (9.4.1). Within 7 days after receiving the application, the architect either issues a certificate for the amount it decides is due (copy to the contractor) or tells the owner and contractor in writing why it is withholding all or part. The certificate is the architect's representation, based on site visits, that work has progressed to the point shown and the quality is per the documents. It is not a representation that the architect made exhaustive inspections, reviewed means and methods, or checked how the contractor used earlier payments (9.4.2).
Withholding (9.5.1). The architect may decline to certify, or nullify an earlier certificate, because of defective work not fixed, third party claims, failure to pay subs or suppliers, reasonable evidence the work cannot be finished for the unpaid balance, damage to the owner or a separate contractor, reasonable evidence the work will not be finished on time and the unpaid balance would not cover actual or liquidated damages, or repeated failure to carry out the work.
Progress payments (9.6). The owner pays the certified amount within the time set in the agreement. The contractor pays each sub no later than 7 days after receiving payment (9.6.2), the amount the sub is entitled to less retainage held on that sub. If the contractor does not provide proof of payment within 7 days after the owner asks, the owner may contact subs directly (9.6.4). A certificate, payment, or partial occupancy is not acceptance of nonconforming work (9.6.6).
Failure of payment (9.7). If the architect does not issue a certificate within 7 days after receiving the application, through no fault of the contractor, or the owner does not pay within 7 days after the date set in the documents, the contractor may, on 7 additional days written notice to the owner and architect, stop the work until paid. Price and time are increased for the shutdown, delay and startup costs, plus interest.

Retainage is the part of each payment held back until completion. A201 does not set the percentage; the owner contractor agreement does (for example A101 Article 5). In Florida, public contracts over $200,000 are capped at 5% retainage under F.S. 255.078. For private work, F.S. 715.12 requires the owner to release retainage within 14 days after the certificate of substantial completion, certificate of occupancy, or owner possession, subject to the punch list rules.

Substantial Completion (9.8). The stage when the work is sufficiently complete per the documents so the owner can occupy or use it for its intended purpose. The contractor prepares a comprehensive punch list of items to be completed or corrected and asks for inspection. The architect inspects; if items not on the list are found, the contractor must complete them too. When done, the architect prepares a Certificate of Substantial Completion (AIA G704) that sets the date, divides responsibility for security, maintenance, utilities, damage and insurance, and fixes the time to finish the punch list. Warranties start on the date of Substantial Completion unless the certificate says otherwise. On the certificate the owner pays the retainage for that work, less amounts withheld for incomplete or nonconforming work.

Partial occupancy (9.9): the owner may occupy a finished part before full Substantial Completion if the insurer consents and the authorities allow.

Final completion and final payment (9.10). After the contractor's written notice that the work is ready and a final application, the architect inspects and issues a final certificate. Before final payment the contractor gives: an affidavit that payrolls, bills for materials and other debts are paid or satisfied; a certificate that required insurance remains in force; a written statement the contractor knows of no reason the insurance will not be renewed; consent of surety to final payment; documentation of warranties; and, if required, lien releases. Making final payment waives the owner's claims except liens, failure of the work to comply, warranty rights, and claims already made (9.10.4). Accepting final payment waives the contractor's claims except those already made in writing and still unsettled (9.10.5).

2.4.9 Articles 10 to 13: safety, insurance, correction and miscellaneous

Article 10 Protection of persons and property. The contractor is responsible for starting, keeping and supervising all safety precautions and programs (10.1). It protects employees, the work, materials stored on and off site, and adjacent property; follows the law; erects safeguards; and designates a responsible person on site, the superintendent unless named otherwise, to prevent accidents (10.2). A party that suffers injury or damage because of the other party must give written notice within a reasonable time, not more than 21 days after discovery (10.2.8). If the contractor finds hazardous materials (for example asbestos or PCB) not addressed in the documents, it must stop work in the area and report at once (10.3.1); the owner hires a licensed lab to test and, if needed, to remove them; time and price are adjusted. In an emergency affecting people or property, the contractor must act at its discretion to prevent damage, injury or loss (10.4).

Article 11 Insurance and bonds. The contractor buys liability insurance of the types and limits in the agreement (11.1.1), from insurers allowed in the project's state. It gives certificates before starting work. If the contractor learns of an impending or actual cancellation or expiration, it notifies the owner within 3 business days (11.1.4); the owner has the same 3 business day duty for its property insurance (11.2.3). Bonds: the owner may require performance and payment bonds; the contractor gives a copy of a payment bond to a potential claimant who asks. The owner buys builder's risk property insurance on an all risks or equivalent basis for the full replacement cost unless the agreement says otherwise. Waivers of subrogation (11.3): owner and contractor waive rights against each other and their subs, architects and agents for damages covered by property insurance, so insurers cannot sue the other team members. In a covered loss, the owner adjusts and settles with insurers; the contractor has 14 days after notice to object to the proposed settlement (11.5.2).

Article 12 Uncovering and correction. If work was covered contrary to the architect's request or the documents, the contractor must uncover it for examination and recover it at its own cost (12.1.1). If the architect did not ask before it was covered, the owner may still ask to see it: if the work is correct, the owner pays the uncovering and replacement through a Change Order; if it is wrong, the contractor pays (12.1.2). The contractor promptly corrects work rejected by the architect or failing to conform, whether found before or after Substantial Completion. One year correction period (12.2.2.1): if within one year after Substantial Completion (or after warranty start dates set under 9.9.1), any work is found not to conform, the contractor must correct it promptly after written notice from the owner. If the owner fails to notify the contractor and give a chance to correct, the owner waives the right to require correction. The one year is extended for work first performed after Substantial Completion (12.2.2.2), but corrective work does not restart the one year (12.2.2.3). The one year period is not a limit on other duties or the statute of limitations; it relates only to the specific duty to correct (12.2.5). Under 12.3 the owner may accept nonconforming work instead of correction, with a reduction in the contract sum.

Article 13 Miscellaneous. The contract is governed by the law of the place where the project is located (13.1). Neither party assigns the contract as a whole without the other's written consent, except the owner may assign to a lender (13.2). Rights and remedies are in addition to those the law gives; no action or failure to act is a waiver unless agreed in writing (13.3). Tests and inspections (13.4): the contractor arranges and pays for those the documents or laws require at the right time; the owner pays for extra tests the architect orders if the work passes; if work fails, the contractor pays. Interest (13.5): payments due and unpaid bear interest from the due date at the rate agreed or, if none, at the legal rate where the project is located. Note: the 10 year limit on claims, which was in Article 13 of the 2007 edition, is in 15.1.2 in 2017.

2.4.10 Article 14 termination and suspension

Termination by the contractor (14.1). The contractor may terminate if the work is stopped for 30 consecutive days through no act or fault of the contractor or its subs, for any of these reasons (14.1.1):

a court order or other public authority order requiring all work to stop;
an act of government, such as a declared national emergency, that requires all work to stop;
the architect has not issued a Certificate for Payment and has not notified the contractor of the reason, or the owner has not paid on time;
the owner has failed to furnish reasonable evidence of financial arrangements (2.2).

The contractor may also terminate if repeated suspensions, delays or interruptions by the owner for convenience add up to more than 100% of the total days scheduled for completion, or 120 days in any 365 day period, whichever is less (14.1.2). In either case the contractor gives 7 days written notice to the owner and architect (14.1.3) and recovers payment for work done, proven costs from the termination, and reasonable overhead and profit on work not executed, plus damages.

If the work is stopped for 60 consecutive days through no fault of the contractor because the owner has repeatedly failed to meet its duties on matters important to the progress of the work, the contractor may terminate on 7 additional days written notice (14.1.4).

Termination by the owner for cause (14.2). The owner may terminate if the contractor: repeatedly refuses or fails to supply enough properly skilled workers or proper materials; fails to pay subs or suppliers per their agreements; repeatedly disregards laws, codes or orders of a public authority; or is otherwise guilty of a substantial breach (14.2.1). When any of these exist, and on certification by the Initial Decision Maker that sufficient cause exists, the owner may, after 7 days written notice to the contractor and the surety, terminate, take over the site and materials, accept assignment of subcontracts, and finish the work (14.2.2). The contractor gets no further payment until the work is finished. If the unpaid balance is more than the cost of finishing (including the owner's added costs and damages), the excess goes to the contractor; if the cost is more, the contractor pays the owner the difference (14.2.4).

Suspension by the owner for convenience (14.3). The owner may order the contractor in writing to suspend, delay or interrupt the work without cause. The price and time are adjusted for the increased cost and time; the adjustment includes profit. No adjustment if the contractor was already responsible for the delay.

Termination by the owner for convenience (14.4). The owner may terminate at any time without cause. The contractor must stop work, take actions to protect the work, and terminate subcontracts as directed. The contractor is paid for work executed, costs incurred because of the termination, and the termination fee, if any, stated in the agreement (new in 2017).

2.4.11 Article 15 claims and disputes

A Claim is a demand or assertion by one party seeking, as a matter of right, payment of money, a change in time, or other relief. The responsibility to prove a claim is on the party making it (15.1.1).

Time limit (15.1.2): all claims must be started within the time allowed by law, but in any case not more than 10 years after Substantial Completion. Florida's own repose and limitation rules can be shorter.
Notice of Claim (15.1.3.1): claims by either party that arise before final payment must be started by written notice to the other party and to the Initial Decision Maker (with a copy to the architect if the architect is not the IDM) within 21 days after the event, or within 21 days after the claimant first recognizes the condition, whichever is later. Claims found after the one year correction period are started by notice to the other party only, without an initial decision (15.1.3.2).
Keep working (15.1.4): pending final resolution, the contractor proceeds diligently and the owner keeps paying under the contract.
Claims for more time (15.1.6): include an estimate of cost and probable effect of delay. One claim is enough for a continuing delay. Weather claims need documentation (15.1.6.2).
Mutual waiver of consequential damages (15.1.7): the owner waives rental expenses, losses of use, income, profit, financing, business and reputation, and management or employee productivity. The contractor waives principal office expenses, losses of financing, business and reputation, and loss of profit except anticipated profit arising directly from the work. Liquidated damages for delay set in the agreement are not barred by this waiver.

Initial Decision (15.2). Claims (except those under 10.3, 10.4, 11.5 and the post correction period ones) go first to the Initial Decision Maker (IDM), who is the architect unless the parties name someone else (15.2.1). An initial decision is required before mediation of any claim. If no decision comes within 30 days after referral, the claimant may demand mediation and binding dispute resolution anyway. Within 10 days of receiving a claim, the IDM must do one or more of: ask for more data, reject the claim in whole or part, approve it, suggest a compromise, or say it cannot resolve the claim (15.2.2). A party asked for more data must respond within 10 days (15.2.4). The initial decision is final and binding but subject to mediation and binding dispute resolution (15.2.5). Within 30 days after an initial decision, either party may demand in writing that the other file for mediation; if the receiving party does not file within 30 days after the demand, both parties waive their rights to mediate or pursue binding resolution of that decision (15.2.6.1).

Mediation (15.3). Mediation is a condition precedent to binding dispute resolution for claims subject to it (15.3.1). It is administered by the American Arbitration Association under its Construction Industry Mediation Procedures unless the parties agree otherwise. A party may file binding resolution together with mediation, but that proceeding is put on hold for 60 days from the mediation filing (15.3.2). Fees are split equally. Mediation is held where the project is located. After mediation ends without resolution, a party may within 30 days (or 60 days after mediation was demanded with no resolution) demand that the other file for binding resolution; if that party does not file within 60 days, both waive binding resolution (15.3.3).

Arbitration (15.4). Used only if arbitration is selected in the agreement. Administered by the AAA under its Construction Industry Arbitration Rules. A demand for arbitration may not be made after the date a legal proceeding would be barred by the statute of limitations (15.4.1.1). The award is final, and judgment may be entered in any court with jurisdiction. Either party may consolidate arbitrations or join other parties when there are common questions of law or fact and the procedures are similar (15.4.4).

2.4.12 A401, A701 and the master day count list

A401 2017 Contractor Subcontractor Agreement. A401 incorporates A201 2017 by reference as its default general conditions. Its key idea is flow down (Article 2, mutual rights and responsibilities): for the subcontract work, the sub assumes toward the contractor all the obligations the contractor assumes toward the owner and architect, and the contractor gives the sub the same rights and remedies the owner gives the contractor. The contractor must make the prime contract documents available to the sub before signing. Main points:

Payment (11.1.3): if the sub's application arrives by the cutoff day of the month that the parties fill in, the contractor includes it in its next application to the owner and pays the sub no later than 7 working days after the contractor receives payment from the owner. If the architect does not certify, or the contractor is not paid, for a reason that is not the sub's fault, the contractor pays the sub on demand. Compare A201 9.6.2, which says 7 days after receipt.
Retainage (11.1.8): percentage is left blank for the parties to fill in; items can be excluded and retainage can be reduced as work progresses.
Remedies for nonpayment (Article 4): if the contractor does not pay the sub within 7 days after the time payment should be made, through no fault of the sub, the sub may, on 7 additional days notice, stop work until paid, and recover reasonable shutdown, delay and startup costs.
Termination for cause (7.2.1): if the sub repeatedly fails to carry out the work and fails within a 10 day period after receipt of notice to start and continue correcting, the contractor may terminate and finish the sub's work by whatever method it considers fit. A401 also allows the contractor to correct sub defaults and deduct the cost.
Claims and disputes (Article 6): mediation is non binding but required first; binding resolution is arbitration or litigation as checked; arbitration is held where the project is.
Insurance (Article 12): sub carries insurance per the agreement and names additional insureds as required. Notices (Article 14): may be electronic except Notices of Claims, which need certified or registered mail or courier with proof of delivery.

A701 2018 Instructions to Bidders. Used on competitively bid projects.

Bidder representations (2.1): by bidding, the bidder says it has read and understands the bidding documents, has studied them, visited the site and compared site conditions with the documents, based the bid on the specified materials and systems without exception, and has read the liquidated damages terms.
Bidding document deposit (3.1.2): refunded to bona fide bidders who return paper documents in good condition within 10 days after receipt of bids.
Requests for clarification or interpretation (3.2.2): in writing, received by the architect at least 7 days before the bid date. Only answers issued by Addendum are binding (3.2.3).
Substitutions (3.3.2.1): written requests received at least 10 days before the bid date. The architect's decision is final; approvals bind only when issued by Addendum.
Addenda (3.4.3): issued no later than 4 days before the bid date, except an addendum that withdraws the request for bids or postpones the bid date. Bidders confirm they received all addenda and acknowledge them in the bid (3.4.4).
Bid security (4.2): form and amount are stated in the bidding documents. If the selected bidder will not sign the contract or furnish required bonds, the security is forfeited as liquidated damages, not as a penalty. A bid bond is on AIA A310 unless stated otherwise, with a certified, current copy of the surety's power of attorney. The owner may hold the bid security until the contract is signed and bonds furnished, the bid withdrawal period has passed, or all bids are rejected.
Modification or withdrawal (4.4): before the time set for receipt of bids, a bidder may withdraw or replace its bid by notice received by that time. After that time, bids may not be modified, withdrawn or canceled during the stipulated period in the bidding documents. A bidder who finds a clerical error after the bid time must notify the architect within 2 days (or the period set by local law) and, with evidence, the bid is withdrawn and cannot be resubmitted.
Consideration of bids (Article 5): bids may be opened publicly and read aloud when stipulated or required by law; the owner may reject any or all bids unless prohibited by law, and may reject non conforming or conditional bids. Award goes to the qualified bidder whose bid is in the owner's best interests, per law.
Post bid information (Article 6): a bidder to be considered submits a qualification statement (AIA A305) if not already given. A bidder may ask, 14 days before the withdrawal period ends, for evidence of the owner's financing; the owner answers no later than 7 days before that time or the bidder is not required to sign (6.2).
Bonds (Article 7): if required, the penal sum is the full contract sum unless stated otherwise. Bonds are delivered no later than 3 days after the contract is signed, on AIA A312 Performance Bond and Payment Bond unless stated otherwise, dated on or after the contract date, with the surety's power of attorney attached.

Where to look in the book: the A201, A401 and A701 forms are separate references (R5, R6, R7). Tab Articles 7, 9, 14 and 15 of A201; Article 11 and the nonpayment remedy in A401; Articles 3, 4 and 7 of A701.

Master list of AIA day counts. Use this table to drill. Questions often say "according to A201, how many days...". In A201, "day" means calendar day unless defined otherwise (8.1.4). Only 11.1.4 and 11.2.3 use business days, and A401 11.1.3 uses working days.

Section	Number	What it applies to
A201 2.1.2	15 days	Owner gives the contractor the legal description and owner info needed for lien rights, after a written request
A201 2.2.2	14 days	Owner gives evidence of financing after the contractor asks; if not, the contractor may stop work
A201 2.5	10 days	Contractor must start correcting a default within 10 days after the owner's notice, or the owner may do the work and back charge
A201 3.7.4	14 days	Notice of concealed or unknown site conditions: before disturbing them and no later than 14 days after first seen (it was 21 days in A201 2007)
A201 3.9.2	14 days	Architect may object to the proposed superintendent within 14 days; silence means no objection
A201 5.2.1	14 days	Architect may object to proposed subcontractors and suppliers within 14 days; silence means no objection
A201 5.4.2	more than 30 days	If work was suspended more than 30 days and the owner takes over a subcontract, the sub's price is adjusted
A201 9.3.1	10 days	Application for Payment due at least 10 days before the progress payment date
A201 9.4.1	7 days	Architect issues a Certificate for Payment, or says why not, within 7 days after receiving the application
A201 9.6.2	7 days	Contractor pays each sub no later than 7 days after the contractor receives payment from the owner
A201 9.6.4	7 days	If the contractor does not show proof of paying subs within 7 days, the owner may contact the subs
A201 9.7	7 + 7 days	No certificate within 7 days, or owner does not pay within 7 days after the due date: contractor may stop work after 7 more days of written notice
A201 10.2.8	21 days	Notice of injury or damage to person or property: within a reasonable time, not more than 21 days after discovery
A201 11.1.4 and 11.2.3	3 business days	Notice of an impending or actual insurance cancellation or expiration (contractor's policies 11.1.4, owner's property policy 11.2.3)
A201 11.5.2	14 days	Contractor may object to the owner's proposed insurance loss settlement within 14 days after notice
A201 12.2.2.1	1 year	Correction period: contractor fixes nonconforming work found within one year after Substantial Completion
A201 14.1.1	30 consecutive days	Contractor may terminate if work is stopped 30 days in a row through no fault of the contractor (court order, government emergency, no certificate, no payment)
A201 14.1.2	100% or 120 days in 365	Repeated owner suspensions totaling more than 100% of scheduled days or 120 days in any 365 day period, whichever is less
A201 14.1.3	7 days	Contractor's termination notice to owner and architect
A201 14.1.4	60 consecutive days + 7 days	Work stopped 60 days because the owner persistently fails its duties: contractor may terminate on 7 more days of notice
A201 14.2.2	7 days	Owner terminates for cause after the Initial Decision Maker certifies cause, on 7 days notice to the contractor and the surety
A201 15.1.2	10 years	All claims must be started within the legal time limit, and never more than 10 years after Substantial Completion
A201 15.1.3.1	21 days	A Claim must be started within 21 days after the event or after the claimant first recognizes the condition, whichever is later
A201 15.2.1	30 days	No initial decision within 30 days after referral: the claimant may go to mediation and binding resolution anyway
A201 15.2.2	10 days	Initial Decision Maker takes first action on a Claim within 10 days of receipt
A201 15.2.4	10 days	A party asked by the IDM for more data must answer within 10 days
A201 15.2.6.1	30 days + 30 days	Within 30 days after an initial decision, either party may demand that the other file mediation; if the other side does not file within 30 days, both waive mediation and binding resolution of that decision
A201 15.3.2	60 days	Arbitration or lawsuit filed together with mediation is put on hold 60 days from the mediation filing
A201 15.3.3	30 / 60 / 60 days	After mediation fails (30 days after it ends, or 60 days after it was demanded) a party may demand binding resolution; the other side must file within 60 days or both waive
A401 11.1.3	7 working days	Contractor pays the sub no later than 7 working days after the contractor receives payment from the owner
A401 Remedies for nonpayment	7 + 7 days	Sub not paid within 7 days after payment was due (no fault of sub): sub may stop work after 7 more days notice
A401 7.2.1	10 days	Sub must start and continue correcting a default within 10 days after the contractor's notice, or the contractor may terminate for cause
A701 3.1.2	10 days	Refund of the bidding document deposit if documents come back in good shape within 10 days after bids are received
A701 3.2.2	7 days	Written requests for clarification or interpretation must reach the architect at least 7 days before bids are due
A701 3.3.2.1	10 days	Written substitution requests must reach the architect at least 10 days before bids are due
A701 3.4.3	4 days	Addenda issued no later than 4 days before bids are due (except one that withdraws the bid request or postpones the bid date)
A701 4.4.3	2 days	Bidder who finds a clerical error after bid opening must tell the architect within 2 days (or the local law period) to withdraw
A701 6.2	14 days / 7 days	Bidder may ask, 14 days before the bid withdrawal period ends, for proof of owner financing; owner answers no later than 7 days before that period ends
A701 7.2.1	3 days	Bidder delivers performance and payment bonds no later than 3 days after the contract is signed