By Steve Rizer
Just how much weight does an order-of-precedence clause carry in a construction contract? Can such a clause be circumvented? Jonathan Dunn, Construction Practices group lead partner in Sedgwick LLP’s Orange County, Calif., office, addressed this topic and a slew of others during “To Kill a Project: Contractor Strategies for Dealing with Defective Plans and Specs,” a webinar that WPL Publishing hosted late last month for a target audience of contractors, public and private owners, construction managers, subcontractors, architects, engineers, and others.
“Sometimes you will get what I call ‘cleverly drafted contracts,’ where [an attempt will be made] to one-up the order-of-precedence clause, and [the language] will say something like, ‘Notwithstanding the order-of-precedence clause or any conflict, the contractor should bid and provide the most stringent means and methods, and the most costly and highest-quality product specified or called for in the plans and drawings,’” Dunn said.
“That sort of ‘supertrump’ argument by the owner [often is] used in negotiations,” according to Dunn. “I think in practical reality, it’s sometimes hard to enforce because if there is this real ambiguity and real conflict, you know, in fairness, the contractor needs to understand what they’re to provide, and the owner is going to be responsible, typically, for paying the cost if a reasonable contractor wouldn’t read it the way the owners [would]. So, you might hear that argument a lot; my experience is [that] in practical reality, [it is] hard to enforce that type of provision, and the order-of-precedence clause … typically would still be the most significant clause on that type of a conflict.”
An order-of-precedence clause “should go through and tell you [that] if there’s a conflict, this document controls over this document, which controls over this document, [and] which controls over this document. That is a very important clause, and it’s one of the first things we identify as lawyers when the clients come to us with a problem because, oftentimes, if you apply the order of precedence, you can resolve certain conflicts and certain provisions that might otherwise be an ambiguity. So, I want to highlight that for everyone. If you haven’t noticed that clause, [review your contract] if you’re facing one of these problems, and then try to re-read it with that understanding. If you still have a problem, you might want to get a more detailed legal opinion on it."
During his presentation, Dunn discussed the role of each party in a traditional design-bid-build project, the pre-bid and bid process, when obligations arise and whose obligations they are, encountering problems during construction, a comparison of American Institute of Architects and ConsensusDOCS contract documents, legal theories, what is recoverable, and other topics.
A recording of the 90-minute webinar can be purchased via the following link: http://constructionpronet.com/Products/1013.aspx.