resolution procedures:
In the event that project personnel from the design professional and owner cannot resolve a dispute, direct discussions should be conducted between the parties' representatives that possess the necessary authority to resolve the matter.
If the parties' representatives are not able to resolve the matter within 5 business days of the first discussion, the parties' representatives shall inform senior executives of the parties that resolution could not be reached.
Upon receipt of such notice, the senior executives of the parties shall meet within 5 business days to endeavor to resolve the matter. If the dispute remains unresolved after 15 business days from the date of the date of the first discussion, the parties shall submit the matter to dispute mitigation, if applicable, and dispute resolution procedures.
The optional non-binding dispute mitigation procedures can either be a project neutral or a dispute review board. The project neutral or dispute review board shall issue nonbinding findings within 5 business days of a referral. If the matter remains unresolved after the findings, the parties shall submit the matter to binding dispute resolution.
If direct discussions do not result in resolution and no dispute mitigation procedure is selected, the parties shall endeavor to resolve the matter by mediation. Mediation shall be convened within 30 business days of the matter first being discussed and shall conclude within 45 business days of the matter first being discussed. Either party may terminate the mediation at any time after the first session by written notice to the non-terminating party and mediator.
The matter is resolved via binding dispute resolution (arbitration or litigation).
C. EJCDC E-500, Agreement Between Owner and Engineer for Professional Services (2020 Version)
The EJCDC's E-500 contract form, “Agreement Between Owner and Engineer for Professional Services,” is the EJCDC's most commonly used form of agreement between an owner and an engineer. Section 6.07, “Dispute Resolution,” of the E-500 offers the following dispute resolution procedures:
Owner or engineer shall issue a notice of claim to the other party. Within 30 days from notice, the parties shall attempt to negotiate all disputes in good faith.
After 30 days, the owner and the engineer shall submit any unsettled disputes to mediation. The mediation process must be completed within 120 days.
If the dispute remains unresolved after mediation, either party may invoke binding dispute resolution. If Exhibit H is included within the E-500 agreement, arbitration is stipulated and must be filed before the dispute would be barred by the applicable statute of limitations. If the E-500 agreement does not incorporate Exhibit H, venue shall be state court having jurisdiction at the location of the project (or federal court in the district in which the project is located, if appropriate).
IV. Standard Purchase Order Forms for Purchaser–Vendor Agreements
The following is a list of dispute resolution provisions for standard purchase order forms for Purchaser–Vendor Agreements published by the AIA and ConsensusDocs—the EJCDC does not have a standard purchase order template. Note that each form allows the parties to edit the purchase order before execution, so it is important to review the exact dispute resolution provisions within the subject purchase order.
A. AIA A152 and A152 Exhibit A, Article 8, Claims and Disputes
The AIA Document A152 – 2019, “Purchase Order,” is AIA's most commonly used purchase order form between a purchaser and a vendor. This one-page form lists AIA Document A152-2019, Exhibit A – Terms and Conditions, as a contract document. Section 1.2 of Exhibit A, “Governing Law, including the Uniform Commercial Code,” notes the choice of law as the project jurisdiction's Uniform Commercial Code (UCC) as adopted, and it indicates that disputes are to be resolved in a court of competent jurisdiction unless the parties agree otherwise—no further procedure is provided beyond this statement. Keep in mind that nearly all US jurisdictions have adopted the UCC in some form.
B. ConsensusDocs 702 and 703, Purchase Orders
ConsensusDocs has two purchase order forms, one for commodity goods (ConsensusDocs 702, which includes a 702.1 attachment) and the other for non-commodity goods (ConsensusDocs 703). Both forms list the parties as the “Buyer” and “Seller” and unlike the AIA form, the ConsensusDocs' forms provide detailed dispute resolution procedures. The 702 lists the following dispute resolution procedures:
In the event that a dispute arises, direct discussions should be conducted between the parties' representatives that possess the necessary authority to resolve the matter.
If the parties' representatives are not able to resolve the matter within 5 business days of the first discussion, the parties' representatives shall submit the matter to binding dispute resolution, which can be litigation or arbitration depending on what the parties selected on the purchase order form.
The 703 form adds a mediation requirement before binding dispute resolution:
In the event that a dispute arises, direct discussions should be conducted between the parties' representatives that possess the necessary authority to resolve the matter within 5 business days of the first discussion.
If the parties fail to resolve the matter through direct discussions, the dispute shall be submitted to mediation pursuant to AAA rules. The parties shall select a mediator within 15 business days of the request for mediation.
If the matter is unresolved after mediation, the parties' representatives shall submit the matter to binding dispute resolution, which can be litigation or arbitration depending on what the parties selected on the purchase order form.
V. Summary
The first step in perfecting an affirmative claim is to review the dispute resolution requirements of the subject contract. While standard contract forms are editable, the procedures for dispute resolution are generally the same from contract to contract. To the contrary, the dispute resolution procedures for proprietary contract forms vary. Moreover, dispute resolution terms vary based on the type of contract form. To wit, owner–contractor forms terms vary from contractor–subcontractor form terms, and these forms vary from owner–designer contract forms and purchaser–vendor forms. Thus, it is critical for claimants to understand the steps that are necessary to notice claims, get a project-level decision, run through non-binding dispute resolution requirements, and then trigger a binding dispute resolution process. As time goes on, the cost to administer claims goes up, so presenting proper and clearly supported claims early in the process generally saves both parties time and money.
Notes
1 1 https://www.aiacontracts.org/
2 2 https://www.ejcdc.org/online-store/
3 3 https://www.consensusdocs.org/
4 4 Agency Boards include: (1) the Armed Services Board for contracts with military agencies; (2) the Post Service Board for contracts with the US Postal Service or Postal Regulatory Commission; and (3) the Civilian Board for all other federal agencies unless otherwise specified.