In construction contracting, it is very common for contracts to incorporate other documents “by reference”. From a legal standpoint, the effect of these types of clauses is to make these other documents part of the contract. This is almost always done in order to include the project Plans and Specifications. Normally this poses no significant risk of hidden obligations because all responsible bidders will review the plans and specifications prior to bidding the work.

However, it is quite common for the plans and specifications to also incorporate additional documents. This multi-level layering of referenced documents can be a potential problem for the unwary. For example, many subcontracts will incorporate the owner – general contractor agreement into the contract by reference. By doing this, a subcontractor may be inadvertently agreeing to many additional obligations and limitations of rights. This can include some very important issues such as limitations on damages, dispute resolution procedures, venue provisions and the like.

It is also quite common for many governmental agencies to have their own internal design, performance and workmanship standards. If these standards are incorporated into your contract by reference and you fail to adhere to these standards, you may be liable for damages.

In most cases, you will be held liable to comply with not only your contract, but also with all documents incorporated into the contract by reference. Failure to receive, read or understand these incorporated documents is rarely a defense.

Simply put, construction contracting can be complicated at times. Although many construction projects are completed successfully with little attention paid to the contract, it is still important to fully understand your rights and obligations. Getting copies of all the documents you need can be time consuming and take a lot of effort, but a few hours of dispute prevention can be much less costly and time consuming than a protracted legal battle.

Remember, when things don’t go well at the jobsite, one of the first things the other side will use against you will almost always be the contract. Not fully understanding your contract can result in some very unpleasant surprises.