Prefabricated construction is a hybrid of construction and manufacturing. The Uniform Commercial Code and common law are two potentially competing bodies of law. Fundamental issues pertaining to performance requirements and payment are handled differently, depending on the law. The 253 addresses these issues in a manner that is best practice and more traditional to construction.

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Prefabrication continues to grow in usage and impact. It is a hybrid of construction and manufacturing. Also, prefabrication includes on-site and off-site performance requirements. As such, several interesting legal issues arise that must be addressed contractually.

The new ConsensusDocs 253 is based upon the risk allocation issue and terms in the ConsensusDocs 200 Standard Owner/Constructor Agreement and General Terms and Conditions. This new document empowers an Owner to contract directly with the Prefabricator with an off-the-shelf best practice standard agreement. The agreement presumes the most common type of prefabrication in which a prefabricated component is made off-site at the prefabricator’s site. Then that component is delivered and installed at the worksite. Some particular points to highlight in this document include:

  • Establishes industry standard definitions for terms for prefabricator, fabrication site as compared to the worksite, storage area, and a prefabricated Component.
  • Calls for users to create an exhibit to delineate work to be performed off-site versus at the worksite.
  • Specifies adequate storage areas must be provided for prefabricated components.
  • Requires three days’ advanced notice for inspections of the Prefabricator’s site to protect sensitive proprietary information (§9.6).
  • Recognizes that a Prefabricator’s fabrication methods and methods are confidential (§3.22 and §9.6).
  • Addresses warranty issues when a Prefabricator acts as a manufacturer versus providing other materials and equipment that are incorporated in the Work (§3.8).
  • Addresses several scenarios regarding the risk of loss of a prefabricated component during different stages of transportation and delivery (§3.10).
  • Provides an option to require an upfront payment to account for the large capital outlays needed to make for prefabricated components (§9.1).

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