The material shortages in the roofing industry continue to adversely impact job scheduling causing delays in both residential and commercial projects. The industry faces shortages of key roofing components such as fasteners, plates, ISO, cover boards, foam adhesive, and sealants, among other things. With the hail season underway and hurricane season rapidly approaching, additional pressures will be put on the supply chain to meet the ever-growing demand of roofing contractors throughout North America.
Moving forward, roofing contractors should pay keen attention to contractual terms and include things like a price acceleration clause, material availability clause and the like. However, one contract provision that many contractors overlook is the reasonable substitution provision, which allows a contractor to replace a specified material or piece of equipment with an equal and reasonable substitute.
Most contracts remain silent on the right to substitute equivalent materials, but there are some contracts which address the issue. For example, AIA A201 (2017) briefly addresses the ability to make substitutions in Section 3.4.2:
Except in the case of minor changes in the Work approved by the Architect in accordance with Section 3.12.8 or ordered by the Architect in accordance with Section 7.4, the Contractor may make substitutions only with the consent of the Owner, after evaluation by the Architect and in accordance with a Change Order or Change Directive.
This provision addresses substitutions with the consent of the owner but does not address what happens when the specified material is unavailable or has increased dramatically in price. Therefore, it makes sense for roofing contractors to include a more robust substitution provision in their contracts to give them the opportunity to obtain equivalent materials in the event of a shortage.
Here is a contractor-friendly provision that roofers can insert into either their contracts or contracts they receive from their customer:
In the event that any specified material or equipment becomes unavailable either temporarily or permanently after the contract is executed, provided that such availability is a result of factors beyond Contractor’s control, then in the event of temporary unavailability, the contract time shall be extended to reflect the duration of time that the contractor is delayed by the unavailability, and in the case of permanent unavailability, the contractor shall be excused from providing said material or equipment and allowed to provide an available substitute. To the extent an available substitute is provided by Contractor under this provision, any increase in the cost between the originally specified material and equipment and the substitute shall be paid by the Owner to the Contractor.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.