Ultimate responsibility for full compliance with the contract requirements rests with the contractor. Inspections conducted by the project owner are for the protection and benefit of the owner, not the contractor. In the absence of a duly authorized contract modification, even owner approval of work may not be binding on the owner prior to final acceptance of the project. These principles of construction contracting explain some seemingly inequitable results regarding owner inspection and approval of work.
On an Army Corps of Engineers project in California, several government inspectors observed a contractor’s electrical subcontractor installing nonconforming wiring in multiple buildings. The quality assurance personnel approved the wiring and authorized closing the interior walls with sheetrock. When the electrical work was almost complete, higher government authorities learned of the nonconforming material. The contractor was ordered to rip out the walls, replace the wiring and restore the walls – all at the contractor’s own expense.
The other case in this issue involved subcontractor liability to the injured employee of another subcontractor. The injured worker received worker’s compensation and was barred from suing its employer subcontractor or the prime contractor, which was responsible for the comp insurance compliance of its subcontractors. The worker sued two other subcontractors on the project for negligence. However, the Idaho Supreme Court ruled those subs were also immune from liability.