By Bruce Jervis
Construction contracts frequently specify procedures and deadlines for submitting claims. A contractor’s failure to comply bars any right to a remedy under the contract. An example from a recent case called for written notice to the project engineer within 30 days of the occurrence giving rise to the claim, quantification of the claim and supporting documentation within 60 days of the occurrence, and written notice of appeal of the engineer’s decision within 60 days of substantial completion of the project.
The contractor in this case failed to file a timely notice of appeal. It lost the right to go to court seeking remission of more than $200,000 in liquidated damages the contractor alleged had been wrongfully withheld by the project owner. And the owner never even contended it had been unaware of the claim or had suffered any prejudice as a result of the late notice of appeal.
Claim notification requirements are not inherently unreasonable. Project owners must be given an opportunity to respond to problems promptly and mitigate their costs. Owners are entitled to know the basis for a claim and the amount demanded.
All too often, however, multiple written notice requirements are embedded in the contract as a “condition precedent” to any contractor recovery. It can be argued that these notice requirements function not to protect the legitimate interests of the project owner, but to defeat the reasonable expectations of contractors. What is your opinion? I welcome your comments.