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Sustainable design and construction is a rapidly evolving and growing sector of the building industry. However, it presents new challenges and legal considerations for owners, architects and contractors.



Continued development in the field has created a diverse and often confusing set of competing certifications, standards and codes that may be applicable to sustainable design and construction projects. Project participants cannot afford to rely on boilerplate contracts that do not specifically address these issues.

To establish a clear understanding of what is and is not required on a sustainable project, the project participants should use contract documents that are specifically tailored to sustainable projects and provide a clear process for establishing and achieving the project's sustainability requirements.

Building codes and rating systems often place different parameters around what is required for a building project to be considered “sustainable.” In jurisdictions adopting “green” building codes, like the International Green Construction Code, building projects must meet mandatory baselines for energy and environmental performance. In the absence of green code requirements or as a supplement to them, owners may undertake voluntary measures, such as LEED certification, in an effort to achieve energy savings or other environmental benefits.

For a sustainable project to proceed effectively, the owner, architect and contractor each will contribute to the successful achievement of the sustainable design and construction requirements. Code mandates or voluntary requirements cannot be achieved without each of the project participants accepting new roles and responsibilities.

To avoid confusion and misunderstandings, design and construction agreements for sustainable projects must outline a clear process to help the project team develop and implement a plan for achieving the code-mandated or owner-initiated sustainable requirements. Establishing open lines of communication between the owner and architect and a solid process for developing a roadmap to achieve the owner’s sustainability goals and requirements is essential in contracts drafted for sustainable projects.

Defining the owner’s sustainable objectives for the project and incorporating those objectives into the agreement requires the architect and owner to work together. As a first step, the owner and architect should work together to develop a sustainability plan that identifies and describes the owner’s sustainable objectives, the target sustainable measures and the sustainable documentation required for the project. They also should determine the roles of the owner, architect, and contractor and responsibilities associated with achieving the sustainable objective. Clearly defining the sustainable requirements in a contract and appropriately allocating responsibility for the elements necessary to achieve those requirements can greatly reduce the potential for disputes.

Other issues addressed by contracts tailored specifically for sustainable projects include warranties, product risks and damages. Regarding warranties, all designers, constructors, and suppliers should seek the advice of insurance and legal counsel if they are asked to guarantee a project will obtain a third-party certification (like LEED). Achievement of third-party certifications requires contributions from each member of the construction team and is outside the control of any specific party.

If new or untested products will be used on the project, consider including language in the contract that addresses the risk of the product failing to perform as expected, or being less durable and functional than anticipated. Also, consider a waiver of consequential damages that is carefully drafted to cover some of the unique types of damages that may be encountered on a sustainable project like unachieved energy savings, unintended expenses, lost financial or tax incentives or unachieved gains in worker productivity. This can be an important tool in mitigating unexpected and possibly catastrophic damages claims on sustainable projects.

Ultimately, sustainable projects can be rewarding for the entire project team. However, contracts for sustainable projects present unique and challenging risks that can be avoided by specifically tailoring contracts to the project. Before deciding to pursue sustainable projects, spend some time discussing contracts with insurance and legal counsel to choose the right form contract or include language that offers the right protection for each project.
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