Volume 7 - Number 38 | September 28, 2009 - Construction Claims Advisor

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You are here: Home » Volume 7 - Number 38 | September 28, 2009

Volume 7 - Number 38 | September 28, 2009

EDITOR'S NOTES | Issue 7-38: Construction contracts frequently reference or incorporate additional documents pertaining to the work. Though these documents may not be physically attached to the contract, they could become terms of the agreement. Adding to the confusion, other documents addressing the performance of the work may be generated after the contract has been signed. At some point it becomes difficult to determine the terms that govern the transaction.

In a case reported this week, a fabrication subcontract lacked a schedule for the delivery and installation of the fabricated components. But a detailed "layout schedule," created after contract execution, was quite specific on that matter. When the fabrication subcontractor missed the deadline, the contractor could terminate the subcontract for default.

Other cases reported this week involve resolution of a conflict within the design documents and the right of an unlicensed subcontractor to recover payment from an unlicensed prime contractor. The conflict between a drawing note and a specification was resolved under the order of precedence clause. The unlicensed sub was allowed to recover because the North Carolina licensing statute is intended to protect the public from unlicensed contractors, not to protect contractors from each other.

LAYOUT SCHEDULE ESTABLISHED SUBCONTRACT COMPLETION DEADLINE: Though a “layout schedule” was not expressly incorporated into a subcontract, the conduct of the parties indicated a mutual intent to be bound by that schedule. Failure to meet the schedule justified a termination for default.

SPECIFICATION PREVAILED OVER CONFLICTING DRAWING NOTE: A specification prevailed over a conflicting drawings note pursuant to an order of precedence clause in the contract. Even if there was an ambiguity, it was patent and should have been called to the project owner’s attention prior to bid submittal.

UNLICENSED SUBCONTRACTOR ALLOWED TO RECOVER FROM UNLICENSED PRIME: An unlicensed subcontractor could recover payment from an unlicensed prime contractor. The state licensing statute was intended to protect the public, not to protect contractors from each other.