Electical Contractor

How would you react if you discovered—after the fact—that you had signed a contract that permitted the other contracting party (owner or general contractor) to act arbitrarily, to actively interfere with your work, to act in bad faith, and even to be guilty of fraud?

In the construction industry, many projects end with unresolved claims. The outstanding matters may be a result of an accumulation of changes encountered during the job for which a final price, or even acknowledgment that there is an extra, remains to be negotiated.

Recently, a client asked me to review a set of general terms and conditions issued by the owner of a large project. To do this task, which I perform frequently for clients, I apply certain review protocols I developed to ensure all clauses that affect time or money are highlighted.

I posed nine multiple choice questions in my September 2011 column. The following are answers and analyses. As you review the problem analyses, keep in mind that, if you gave serious thought to the questions, you have gone a long way to being right regardless of your answer.

Less than 10 percent of construction lawsuits go to trial. There are reports that the number is actually less than 5 percent. Many reasons are obvious: The cost of litigation, its detrimental effect on the litigants’ business, and the personal toll exacted from being in court.

Once two parties have negotiated and signed a contract, that document’s terms and specifications are supposed to be unalterable, except by further mutual agreement.

For most contracts, a contractor’s application for final payment must be accompanied by final waivers of lien and verified statements that all amounts due are accounted for. Where there are outstanding claims, the request for final payment becomes problematic.

An illusory promise is an oxymoron, as it is not a promise at all. “I will take out the trash” is a promise of sorts. “I will take out the trash if I feel like it” is illusory.

There is no way around it. The concept of revocation of acceptance is an odd one. If you pay for goods or services that turn out to be less than what you bargained for, your first thought might be to sue for damages for breach of contract.