Some of the more interesting and instructive court opinions involve the interpretation of clauses commonly found in construction contracts. The dry language of the contract comes alive when applied to actual situations that arise on projects. The three cases in this issue involve a pay-if-paid clause, a differing site conditions clause and an engineer inspection clause.
The pay-if-paid clause appeared to unambiguously pass the risk of owner nonpayment through to the subcontractor. But the sub raised two arguments. Due to public policy concerns, the clause should be viewed with disfavor by the Connecticut courts. Further, the prime contractor demonstrated bad faith by not vigorously pursuing the project owner for payment.
The differing site conditions clause in the second case was quite standard. The contract documents, however, repeatedly disclaimed owner responsibility for the accuracy of the site condition information. A New Jersey court was asked to determine the extent to which the exculpatory language negated the differing site conditions clause.
In the third case, the agreement between a project owner and a consulting engineer specified the scope of the engineer’s construction phase inspection responsibilities. A subcontractor sued the engineer for negligent performance of those duties. A North Carolina court questioned, however, whether the subcontractor’s allegations fell within the scope of the engineer’s authority.