Volume: 16, Issue: 11 - 06/15/2018
A choice of venue clause appears to be classic contractual boilerplate language: boring, standard, and likely inconsequential. The clause stipulates the jurisdiction and the court in which any litigation must occur. In application, however, the clause is significant. It affects the cost and convenience of litigation. It creates – in appearance, if not in fact – “home field advantage.”
In response to these concerns, some legislatures have restricted the enforceability of choice of venue clauses. The state of Washington rendered unenforceable clauses in county public works contracts that require litigation in the county where the project is located. The statute left unchanged, however, a separate provision that requires county project owners to sue contractors in the county where the contractor’s home office is located. This has produced an incongruous situation. Read more.
A choice of venue clause in a public works contract, which required the contractor to pursue claims in the local courts, was unenforceable. However, the public project owner could sue the contractor for breach of contract in the local courts.
A certificate of merit signed by a similarly licensed professional was required in an action against design professionals. In the absence of a timely filed certificate, a trial court was required to dismiss the complaint. However, the dismissal could be without prejudice to a future action.
Volume: 16, Issue: 10 - 06/01/2018
Many states have enacted prompt payment statutes. The purpose is to discourage prime contractors, on both public and private projects, from withholding subcontractor payment on a pretext, in effect gaining interest-free use of those funds. The sanctions for not making prompt payment typically include monthly interest or penalty, as well as reimbursement of the subcontractor’s attorney fees and other costs.
Most state statutes make an exception for payments that are withheld due to a good faith dispute. Read more.
The California Supreme Court has interpreted a state prompt payment statute to require that when payment is withheld due to a good faith dispute, the dispute must relate directly to the payment due. A dispute regarding increased costs did not justify withholding retainage on work that was sufficient and not in dispute.
A payment guarantee requirement in the state lien law was not incorporated into a construction contract and would not be read into the contract under a “choice of law” provision in the contract.
Volume: 16, Issue: 9 - 05/17/2018
Most state mechanic’s lien statutes recognize that demolition is an improvement to real estate and therefore a lienable service. In many situations, there can be no redevelopment, no site remediation, and no new construction without demolition.
The lien statutes have done well in recognizing that de-construction is a phase of construction. However, the lien statutes have failed to account for an important aspect of demolition – the salvage of equipment and materials. Mechanic’s lien statutes are structured around the “contract price.” On many demolition projects, the salvage rights and salvage revenue is a fundamental component of the contractor’s compensation. How does that factor into the contract price? Read more.
The “lien fund” available to unpaid subcontractors is not limited to the earned amount of the stipulated prime contract price, but can include revenue derived from salvage rights under a demolition contract.
A “Best-Value Tradeoff” analysis was supported by a head-to-head technical comparison justifying a price premium. Unsupported comments regarding possible cost savings from the higher price, technically superior proposal were extraneous to the comparison and did not undermine the analysis.
Volume: 16, Issue: 8 - 05/02/2018
One of the fundamental purposes of a written construction contract, signed by each party, is to refute the allegation of oral side agreements, implied agreements, or other agreements relating to the same scope of work. When properly drafted, a contract should serve as a complete, integrated agreement, superseding any negotiations or discussions relating to the work. A party’s remedy is under the terms of the written contract, not in equity and not under some other alleged agreement. Read more.