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?
When drafting an electrical subcontract, it is fairly standard for a general contractor (GC) to refer to the contract between the owner and GC. GCs typically want to include the owner’s terms and conditions.
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.
Let’s test what you have learned from my articles. The following questions can be answered by recalling the most important points and applying them to different scenarios. Keep your answers, and check them against those I will provide in the next issue. 1.
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.
If you are late in paying your utility bill, mortgage or installment on a purchase, you may be charged a late fee. There also may be set fees for the cancellation of orders, insufficient funds in an account or even bank inactivity.
Pillage, plunder, despoil. These words conjure up images of Conan the Barbarian robbing and destroying whole villages. “Spoliate” is a less bloody but similarly archaic word. Spoliation has a unique position in the law and, when proven, can lead to severe consequences.
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.
No matter how thorough and complete the drawings and specifications, there will be manufacturing and installation details that are left to the contractor. These details are often shown on shop drawings.
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.
Getting paid is a business survival issue for electrical contractors. Your customer’s bankruptcy impacts your ability to get paid. It also can result in a court undoing prior transactions if the court views them as preferences.
It seems basic that when two parties enter into a construction contract, they are both bound to perform as agreed. Neither side has the right to walk away from the commitment unless there are exceptional circumstances, none of them good.