ConstructionPro Week, Volume: 6 - Issue: 7 - 02/17/2017

Can an Unreferenced Clause Be Binding on a Contractor?

By Bruce Jervis

 

Can a public contract clause bind a contractor even when the clause is not stated or referenced in the contract? The answer is yes, if the clause is considered mandatory. Lower-level employees cannot alter the procurement process by accidentally omitting important clauses.

 

A federal government contracting officer, procuring construction services, used a contract form intended for the purchase of commercial items. The contract form did not include or refer to the standard clause requiring performance and payment bonds. But, the clause was incorporated into the contract by operation of law.

 

Under federal contract law, a clause expressing significant public procurement policy is considered mandatory. Regardless of whether it was omitted intentionally or inadvertently, it is automatically incorporated into a contract. Federal procurement policy cannot be avoided, deliberately or negligently, by lesser officials.

 

This seems like a harsh rule for public works contractors, particularly the inexperienced, who rely on the text of a contract to determine their responsibilities and obligations. Some state jurisdictions have adopted the same rule, citing federal precedent. Is this fair? Your comments are welcomed.
 

 

COMMENTS

How is this law fair to any contractor who may be inexperienced with that clause. A reasonable person would rely on the written terms of an agreement prepared and forwarded with a request for proposal. If the clause was intentionally or accidentally omitted the contractor should be compensated for the error by way of a change order. The government should not be allowed to be unjustly enriched as a result of an error caused on their part.
Posted by: Erminio D. Haro - Friday, February 17, 2017 11:13 AM


Without this rule, all contracts -- especially those subject to periodic renewal if both sides agree -- would quickly be stripped of any meaningful protections for the taxpayers, who are never at the table when these clauses are removed, either by government officials who are incompetent or have been paid off. I've seen this happen at the local level. Ok, pity the poor inexperienced vendor, but also take pity on the taxpayers because there are many predatory attornies working 24/7 to find ways to enrich big contractors at the expense of those who ultimately pay all the bills. That would be us.
Posted by: R B - Saturday, February 18, 2017 7:01 AM


 









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