12/16/2020

Editor's Notes

May a contractor voluntarily make payments to subcontractors even though liability for those costs is expressly disclaimed in the subcontracts? Not surprisingly, this question was answered in the affirmative. May the contractor then force another party to reimburse the contractor for the extra-contractual payments? Surprisingly, this also was answered in the affirmative.

 

The situation arose when a lead foundation caisson subcontractor was late completing its work, delaying the work of the other trades. The contractor’s standard subcontract form disclaimed liability for acceleration costs. Nonetheless, the contractor paid subcontractors to stand by, reschedule and accelerate their work in order to bring the project back on schedule. The contractor was allowed to recover from the caisson sub even though the acceleration payments exceeded the contractor’s exposure for liquidated damages. The contractor had legitimate business reasons to deliver the project on time.

 

The second case in this issue involves documentation of differing site condition costs. Itemization and documentation were a contractual prerequisite to a valid claim. The contractor could not litigate its claim without compliance.

 

The third case addresses the pricing of a change on a design/build contract. A 100% design may be used to establish baseline costs only if that design is fully compliant with the contract requirements. 

 

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