In my January column, to start off your new year with fresh thinking, I posed seven scenarios. The key question in each was whether the electrical contractor acted reasonably. Before you read the answers below, pull out the January article or read it at https://www.ecmag.com/section/your-business/reasonable-ec and look at any notes you might have made.
The case of the bucket truck
When safety is at issue, courts tend to go with “the safer, the better.” The court here ruled it was not reasonable to lift hot lines without grounding or to substitute human guards for protection of the public. Maybe the owner should have said something, but his silence did not waive the contractor’s obligation to protect the public as well as his own employees. Had someone been hurt, the owner would likely be sued for not intervening earlier.
The case of the unseen site
In a similar case, a court decided the contractor’s failure to inspect the site was not a reasonable course of action. The presence of above-ground rock could lead a reasonable person to inquire about subsurface rock. Even for familiar territory, site inspection is worthwhile to determine site access, drainage and potential interferences. It would be hard for an EC to explain to a court why it did not inspect the site.
The case of the unrocked boat
It is chancy to hope a court will find the general contractor waived the written notice requirements in a subcontract based on a conversation. A court held that the general’s direction was too informal to constitute a waiver of such important clauses. In other cases, even where a court found there was a waiver of written notice for extras, other clauses that required written notice were not considered waived.
The EC should either have ignored the general’s direction or should have confirmed in writing that the general had modified the contract.
The case of the revised subcontract
An EC friend told me that, if the general contractor pulled this on him, he would kick him in the butt! A court ruled that the EC was bound by the agreement as written. He could not avoid the unwanted clauses by saying he had not read the revised subcontract. In other words, he could not reasonably rely on verbal assurances where there was a written agreement.
The case of the lost jobs
It is not unreasonable for a subcontractor to reduce its bid for the promise of future work. However, the subcontractor should ensure it has a separate written agreement with the general confirming the bid was lowered in exchange for the promise. Otherwise, courts will view the “understanding” as mere negotiations that do not rise to the level of an enforceable agreement.
The case of the late-paid sub
It is not uncommon, or unreasonable, for a subcontractor to exercise patience about payments and accept them when they are late. A court has ruled that a sub who abandoned a job (because it had not been paid) acted unreasonably when the past-due balance was small in relation to the overall value of the subcontract and the general contractor had already said it would meet with the sub to discuss the overdue amount. In another case, a court ruled the sub’s demands for additional promises not in the contract amounted to a breach of contract by the subcontractor.
The case of the existing columns
A construction arbitration panel has ruled that it was not unreasonable for the owner to seek assurances that the columns could bear the additional weight, so it was up to the contractor to satisfy the owner that the assumptions about the weight-bearing capacity of the columns were reasonable. Because the electrical sub decided to use floor-mounted supports rather than get a structural test, the panel found the sub made a voluntary election and it was not the owner’s responsibility. This dispute might have been avoided if the sub had inserted its assumption about the columns’ use in its subcontract.
In the January article, I asked you to discuss these scenarios in-house. How reasonable were you and your team?
It is unlikely that you will ever encounter a project with facts identical to these situations. What is important is that you get in the habit of analyzing your actions on a project. Do so from the standpoint of the reasonableness of your behavior and from the perspectives of the general contractor or owner. Once you do that, you will be in a better position to evaluate what a judge or other decision-maker would say is reasonable.