In contracts a common practice is to include what’s called a “merger” term where all prior contracts, meetings, and correspondence on the subject matter is considered to be merged into the agreement. In doing that the clause states that the agreement represents the entire understanding of the parties. What that does is eliminate other correspondence that may have existed at the time of the agreement from being considered in the interpretation of the agreement. The only problem is that term only addresses correspondence that existed prior to the execution of the agreement, it does not limit correspondence that happens after the agreement is signed. In many contracts there will substantial correspondence that occurs between the parties. If there is a problem that occurs and the contract itself isn’t clear, a party may seek to introduce these documents as evidence of what the parties agreed or understood.
I wrote a blog post about documents "signed for record purposes only" that is appropriate to share as part of this post.
Signed for record purposes only is a qualifying statement that is most commonly used in construction contract documents. For the owner, having a contractor sign a document “for record purposes only” is simply not something you want to accept. The reason for that is the statement isn’t making any representation that the information is complete and accurate. The contractor wants to have the document be part of the records under the agreement where they could potentially use that to bill or make a claim against. What this does is place the burden of proof on the owner as to its accuracy to ensure that what was included is accurate. If a supplier is preparing a document that is the basis for them wanting to be paid or for them to potentially use in a claim, I want a representation that the information is complete and accurate.
For the owner using “signed for record purposes only” on documents they acknowledge makes sense. If I was allowing a clerk of the works or site engineers to sign contractor documents, I would want those signed for record purposes only. For example a contractor may want a record of the materials that they brought on site as part of documenting that as an additional cost. When the clerk or site engineer signs that for record purposes only, all they are doing is agreeing that the activity occurred. They are not agreeing they were needed or required. This leaves it up to the owner to determine what should or shouldn’t be covered under the agreement.
In a claim the contractor would use that document as proof of what they had delivered to the site. In defending against the claim the owner would do a number of things. Normally if you have a clerk of the works or site engineer you require them to maintain a daily site log of all the activities that are occurring on site. You would review that site log to see all materials brought on or taken off the site. They would also review the architect or engineers instructions to the contractor about its operations and protection of the materials. The owner would use all of that information to determine whether they supplier did anything to cause the problem that required the additional soil. Based on that they would determine what, if anything, the supplier should be paid.
Having a record of an action and agreeing that the owner is responsible for costs associated with that action are two different things.
This one example highlights the need for contract managers to make sure that all correspondence they send to the other party is both a clear and accurate understanding of the facts. This also means that they need to review all correspondence, meeting minutes, generated by the other party to also ensure that what they are saying is both clear and accurate. If something is wrong or was not agreed, you can’t sit by and do nothing. You need to document what you believe is the fact or agreement. If you do nothing, only their side of the story becomes part of the contract record and may be introduced into evidence.
I’ve worked on programs where I agreed the contractor or supplier would publish meeting minutes of all meetings. I had one condition to agreeing to that. They were required to send me a draft copy of any minutes for my review and that they only be published and be made part of the contract record after we both agreed the content was the complete, accurate, understanding of both parties.
If the other party sends you correspondence that's not clear of accurate always provide a response to clarify or correct it.That does two things. First, you make it clear that you have not accepted what they have said as true or accurate. Second, if a claim or lawsuit occurs at a later point in time when you aren't around, the contract file will present an accurate record of the activity.
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