Volume: 18, Issue: 22 - 12/01/2020
Publicly procured construction contracts are subject to statutes and regulations governing permissible contractual arrangements. Private contracts are largely free from these constraints. Consequently, many of the innovations in construction contracting have come from the private sector. Fast-tracked design/build contracting – now widely authorized in the public sphere – is one example. The first case in this issue addresses fixed and cost-plus contracts on the same project.
The second case this month involves a differing site condition in a "show cause" situation. Read more.
A project owner awarded a fixed-price contract and a separate cost-plus contract to the same contractor for work on the same project. This resulted in a payment dispute and forced the courts to sort out the allocation of costs.
A contracting officer’s statement in a “show cause” notice, acknowledging that the contractor encountered a differing site condition, was not binding against the government. The contractor failed to prove a differing site condition was the cause of its inadequate progress.
Volume: 18, Issue: 21 - 11/16/2020
“Pay-if-Paid” clauses in subcontracts have always been controversial. They purport to shift the risk of project owner nonpayment from the prime contractor, who chooses to do business with the owner, to the subcontractor, who is a stranger to the owner. State legislatures have narrowed the enforceability of these clauses, and courts have shown the same tendency. This was illustrated in a recent decision by the Nevada Supreme Court. While pay-if-paid clauses are not void per se under Nevada law, a state statute does not allow them to deprive a subcontractor of its statutory prompt payment rights. A clause in a framing subcontract was unenforceable.
Other cases reviewed in this issue include a curtainwall performance specification that could not be met and the impossibility of meeting a contract completion date specified in a contract. Read more.
“Pay-if-Paid” clauses in subcontracts are not void per se in Nevada. However, it is unenforceable if the clause deprives a subcontractor of its statutory prompt payment or mechanic’s lien rights.
Even if a prospective subcontractor made representations to a prime contractor regarding the suitability of a certain proprietary product, once the prime wrote the subcontract to require that “approved” product, the prime – not the sub – was responsible for the product’s inability to meet contractual performance standards.
An email from a utility was sufficient to put a low bidder on notice that the project owner’s representation regarding the schedule for utility relocation was inaccurate. The email triggered a seven-day bid protest period.
Volume: 18, Issue: 20 - 11/02/2020
It is necessary for trade contractors to occupy a portion of a project while performing their scope of work. The prime or general contractor effectively grants control of that workspace on a temporary basis. Does this mean a trade contractor can be held liable to a third party – say, an employee of another trade contractor – who is injured in that workspace? Our first case looks at this issue.
The other case in this issue involved a contractor’s argument that its defective work was caused by the project owner’s faulty design. In this particular case, it was necessary to show the defective design was the sole cause of defective work. Read more.
When a subcontractor completes an accepted portion of a project and relinquishes control of the workspace to the prime contractor, the sub has no further responsibility to third parties – such as other trade workers – using that space.
A contractor has an affirmative defense to a project owner’s defective work claim if the contractor can prove the defect was caused by the owner’s insufficient plans and specifications. The owner’s design, however, must be the sole cause of the defect. An evaluation of comparative fault was improper.