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ConstructionPro Week, Volume: Construction Advisor Today - Issue: 109 - 05/26/2011

The Knee-Jerk “Notice” Defense

Construction contractors face many requirements to provide the project owner or owner’s representative with notification of certain conditions or occurrences. Timely notice is frequently a contractual prerequisite to any adjustment of the contract price or schedule. Consequently, owners routinely raise lack of notice as a defense to contractor claims - even when the owner was fully aware of the event.

This knee-jerk notice defense was evident in two recent cases. The discovery of subsurface conditions which differed materially from the representations in the soils reports prompted an immediate flurry of email correspondence among the contractor, the owner and the owner’s consulting engineer. Yet the owner later argued that the contractor’s claim was contractually barred by failure to give formal notice within 10 days of discovery of the condition.

In the other case, a developer, the record owner of the property, said it did not receive notice of a subcontractor’s work, as required by mechanic’s lien statute. But the development company was solely owned and controlled by the same individual who owned and controlled the prime constructor. And that individual had prepared the trade contract in question.

The purpose of notice requirements is to enable the project owner to evaluate and exercise its available options in light of evolving circumstances. The owner is entitled to timely information and may be prejudiced by the absence of that information. But what if the owner already actually has the information? Don’t owners and their representatives sometimes misuse notice requirements, relying on them as a defensive claim tactic while ignoring their purpose? I invite your comments.

Featured in Next Week’s Construction Claims Advisor:

  • “Good Building Practices” Did Not Include Code Compliance
  • Consultant Fees Recovered as Direct Change Order Cost
  • Arbitration Clause Not Incorporated into Subcontract by Reference

 

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