Better by Design
Contracts to Manage Engineers' Professional Liability

Contracts are essential for engineers. After all, strong contracts can protect your firm from frivolous lawsuits and ensure that a project has enforceable rules on the distribution of responsibility. Your contract should be the document you refer to when resolving client complaints and keeping their expectations in check. (Related reading: "Engineer Professional Liability Concerns with Clients.")

Engineer Contracts 101

Engineer Contracts 101

Simply put, a contract is any document that outlines an exchange of value (i.e., your services for the client's payment) with signatures from both agreeing parties. In your line of work, you'll rely heavily on your client contracts. These detail…

  • The fee for services and payment schedule.
  • The scope of work.
  • Limits to liability.
  • Project milestones and deadlines.
  • Insurance requirements.
  • Ownership of the work if the project is terminated early.
  • Nondisclosure agreements.
  • The dispute resolution process.
  • Penalties or ramifications for breaching the contract.
  • Whether or not subcontractors may work on the project.

Perhaps the most important part of your client contract is the scope of services. This section states what services you are going to provide. You'll turn to this section of your contract to navigate client complaints about the engineering project. It will also help you fulfill your professional obligation to educate your client about the work you're doing for them. Be careful not to overpromise, as that's the quickest way to land your business in court when you can't deliver.

The scope of services section should explain…

  • Services that you will provide.
  • How much those services will cost.
  • Services available to the client for an additional fee.
  • Services that you will not perform.

By outlining in detail what the client can expect of you, you help manage their expectations and limit opportunities for disappointment (and subsequent lawsuits). Without this language in your contract, you risk a very real possibility of losing a lawsuit. Courts generally side with the client if the scope of services is vague and you haven't educated your clients about your work.

Engineers: How to Draft Contracts

Engineers: How to Draft Contracts

Professionals and non-professionals alike can easily get lost in the "legalese" of contract language. But for the most part, provisions are fairly straightforward. If you don't have experience writing contracts, study existing contracts or contract templates to see what they include and how they apply to your business.

It's always a good idea to consult a lawyer when drafting or signing a contract. Lawyers can help you write effective boilerplate contracts that you can tailor to specific projects. "Boilerplate" is the term for standardized contract provisions that address common issues you'll encounter.

The Engineers Joint Contract Documents Committee also offers firms the ability to purchase and download a wide variety of contracts related to engineering and construction projects.

Though buying contract services and legal counsel before a project begins can seem like an unnecessary expense, it can end up saving you a lot of money and headaches later on. A sound contract may prevent a client with a weak case from suing and can act as a guide to settle disputes during the project.

Why Businesses with Contracts Still Need Professional Liability Insurance

Why Businesses with Contracts Still Need Professional Liability Insurance

Even lawyer-penned contracts aren't bulletproof. Though they can discourage clients from filing lawsuits, you just never know what the future may bring.

Professional Liability Insurance can help cover legal expenses when your contracts aren't enough to keep lawsuits at bay. Plus, most clients require that you have this coverage before you start work. To receive free Professional Liability quotes, fill out an online application today.

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