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New Contract Form Allocates Liability for Not Achieving Green Building Status
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February 1, 2010
By Eric Casher
Howrey LLP
ConsensusDOCS has issued a contract document that sets out the parties’ liabilities when entering into contracts for green construction.
The U.S. Green Building Council issues sustainable building standards and has developed a certification process that is the most widely used in the United States. Achieving a LEED rating (Silver, Gold or Platinum) depends not only on the structure’s design but on its construction process and how it actually performs once in operation. Many commentators have noted that this creates the potential for significant disputes as to who, if anyone, may be found liable if the project fails to achieve the targeted LEED rating. As a result, many believed there was a need to contractually control the liability risks of project participants on green projects.
The new “ConsensusDOCS 310 Green Building Addendum” is intended to address this concern with a single addendum to be incorporated into each of the major contracts for the project.
The addendum calls for the project owner to designate a Green Building Facilitator (GBF) to take the lead in identifying the measures needed to achieve a particular green status (such as the LEED certification level targeted by the owner), coordinate implementation by the project participants, and gather and submit the documentation needed to actually achieve the desired certification. The GBF can be the project’s architect/engineer, the general contractor or an entirely separate consultant. The project’s design professional remains responsible for incorporating the chosen “green measures” into the project design, with assistance from the GBF.
Most interesting are the provisions assigning potential liability. First, all project participants other than the GBF are expressly relieved of liability for failure of the selected green measures to achieve the targeted green status. The GBF’s own potential liability is left for determination under the GBF’s separate contract with the owner. Second, damages from failure to achieve the targeted green status such as expected operating cost savings, tax benefits and enhanced marketing opportunities are deemed consequential damages and made subject to any waiver of consequential damages in the underlying contracts. Third, all project participants (including the GBF) preserve any specific limitations on or assumptions of liability in their respective underlying contracts with the owner.
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For more information about the issues covered in this report, please contact Eric S. Casher in our San Francisco office at 415-848-3246 or at cashere@howrey.com or contact your Howrey attorney. For more information about Howrey's Construction Practice Group, click here.
©2010 Howrey LLP
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