Choity Khan | Construction Law Zone
Over the past several years, modular construction has been on the rise and this method of construction has been used in the creation of health care facilities, education facilities, and apartment buildings. With the increased demand for housing, the popularity and use of modular construction has grown even more rapidly throughout the industry. In response to modular construction’s growing popularity, in 2020, the ConsensusDOCS Coalition released the first industry-standard contract document in this area—the ConsensusDOCS 753 – Standard Subcontract for Prefabricated Construction. On February 2, 2023, the ConsensusDOCS Coalition announced the publication of the ConsensusDOCS 253 Prime Agreement and General Conditions for an owner to procure prefabricated construction materials and components. This is the industry’s first standard prime-level contract document to address the unique features and legal implications created by the prefabrication process. The ConsensusDOCS 253 provides best practices and risk allocation when the owner purchases the prefabricated components directly from the prefabricator.
ConsensusDOCS 253 follows the risk allocation principles of the ConsensusDOCS 200 Standard Owner/Constructor Agreement and General Terms and Conditions, allowing an Owner to contract directly with the Prefabricator with an “off-the-shelf” standard agreement. The contract document presumes the scenario wherein an Owner purchases a prefabricated component made at the prefabricator’s site which is then delivered and installed at the worksite. The contract document includes:
- Industry standard definitions for Fabrication Site, a prefabricated Component, and a prefabricated Storage Area;
- Guidance for users to delineate work to be performed off-site versus at the worksite in an exhibit;
- Provisions specifying adequate storage areas that must be provided for prefabricated components;
- Notice provisions for inspections of the Prefabricator’s site which allows Prefabricator’s protection of sensitive proprietary information;
- Provisions acknowledging that a Prefabricator’s fabrication methods may be confidential;
- Provisions addressing warranty issues when a Prefabricator acts as a manufacturer versus providing other materials and equipment that are incorporated in the Work;
- Provisions addressing several scenarios regarding the risk of loss of a prefabricated component during different stages of transportation and delivery; and
- Option for upfront payment to account for the large capital outlays needed to make prefabricated components.
For more information on the ConsensusDOCS 253 Standard Agreement and General Conditions Between Owner and Prefabricator, please visit ConsensusDOCS.
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