By Bruce Jervis
For the second time in recent months, there has been a reported decision addressing the question of what is – and is not – “new” equipment. The first decision involved HVAC equipment to be installed in a project. A federal appeals court opinion now considers whether an equipment lessor met its obligation to furnish a new machine.
Contract documents are replete with references to new materials and equipment; yet the term is left undefined. As the federal court said, “The meaning of ‘new’ in the lease is uncertain. Does the word mean newly designed, newly manufactured, or never used? It could mean any of those things.” Everyone seems to assume they know the meaning of “new,” but in actual application, it is a vague term that is generating litigation.
Isn’t it time to start defining the term in the contract documents? There is obviously no commonly understood meaning in the context of construction contracting. It is causing misunderstandings, disputes and litigation. Parties need to do what is done so often in contracts: define the term. What is your opinion?