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Tiebreaker or Deal-breaker? Order of Precedence in Construction Contracts 

7/24/23

By: Alexander S. Gebert and Timothy B. Soefje

In baseball and softball, when a runner arrives at a base at the same time as the ball, the runner is thought to be safe. In other words, a tie goes to the runner. The construction industry could benefit from a bright-line rule like this. However, in the construction industry, breaking a tie in the contract documents is often far from simple.  

Order of precedence is a term referring to the clause of a construction contract that attempts to prioritize various components of the contract documents in the event of a conflict. The goal of this clause is to break a tie, such as conflicts or ambiguity in contract documents. However, not all construction contracts contain such a clause. The use of an order of precedence clause, or alternative language with a similar goal, when properly tailored, can streamline the process of resolving conflicts.  

Using an order of precedence clause can create uncertainty about how such a pecking order will affect the outcomes of future disputes. This can manifest in the question of what constitutes a true “conflict.” Does a conflict arise when an item is specified on one portion of the contract documents, such as a drawing, but not on another contract document, such as the specifications? Or, is a conflict only triggered in the event of a specific discrepancy? Taking a conflict as any difference between two different contract documents can create problems when applying an order of precedence clause. One example of this is a door and its hardware. If the specifications show hardware but the drawings do not, and an order of precedence clause directs the contractor to look to the drawings over the specifications, the contractor could install doors without hardware. On the other hand, if the specifications take priority over the drawings, a contractor could install only the hardware for a door and not the door itself. Construction contracts commonly address this discrepancy by requiring contract documents to be read together to determine the bounds of certain obligations. 

The American Institute of Architects (“AIA”) generally advises against using order of precedence clauses. The AIA views that including such a clause removes the autonomy of architects to interpret the contract documents and make key decisions, such as whether certain contract documents conflict with one another.  

Conversely, ConsensusDocs, another provider of many standard-form construction industry contracts, includes an order of precedence clause in its contracts. ConsensusDocs’ standard order of precedence clause establishes the general priority at the top with change orders and written amendments to the parties’ contract, the parties’ agreement next, and then drawings, specifications, owner-furnished information, and “other contract documents,” in that order.  

ConsensusDocs also presents alternative language to consider instead of an order of precedence clause, for example:  

“[a]mong all the Contract Documents, the term or provision that is most specific or includes the latest date shall control. Information identified in one Contract Document and not identified in another shall not be considered to be a conflict or inconsistency. If any provision of this Agreement conflicts with or is inconsistent with any other provision of other Contract Documents, the provision of this Agreement governs, unless the other provision specifically refers to the provision it supersedes and replaces in this Agreement.” 

ConsensusDocs, ConsensusDocs Guidebook: ConsensusDocs 200 – Agreement and General Conditions Between Owner and Constructor (Lump Sum)  

Whether adding similar language to an existing order of precedence clause or using the above language in the place of an order of precedence clause, clarifying the bounds and hierarchy of conflict resolution can go a long way to head off potential issues before they become a problem. All parties involved in construction projects—owners, design professionals, and contractors alike—should be clear and intentional about the decision to use an order of precedence clause or similar language. Further, regardless of the option chosen, they should be cognizant of the contractual language included to ensure the desired result if and when applied.  

Addressing these issues at the outset will preemptively outline and memorialize the parties’ intent when resolving conflicts. This clarification may be the difference between a tiebreaker and a deal-breaker with a construction contract. As Benjamin Franklin once famously said, an ounce of prevention is worth a pound of cure.  

For more information, please contact Texas attorneys Tim Soefje at tim.soefje@fmglaw.com, Alex Gebert at alex.gebert@fmglaw.com or your local FMG attorney.