Substantial completion is a crucial milestone in the course of a construction project. Recognition that a project can be occupied and used for its intended purpose carries significant contractual and financial ramifications. The two cases in this issue involve the responsibility for a necessary element of the work and a contract definition of substantial completion.

A subcontractor argued it had not been responsible for work that was required for timely occupancy of a public school project. The Wyoming Supreme Court refused to accept the sub’s interpretation of a drawing note, saying it was contrary to common use and understanding of the language.

In today's second case, a project's contract documents required a certificate of occupancy from a public agency, using an acronym to identify the agency. Unfortunately, the acronym could be used as shorthand for two separate agencies, one municipal and one state. Fortunately, a separate section of the documents clarified the matter.

A contract requirement for prior approval by a third party did not shift responsibility for the actual performance of the approved work. Additionally, a directive attempting to cure a breach of contract was not a change in the contract requirements.

A request for proposals defined substantial completion using an acronym identifying two different agencies, one state and one municipal. The “definitions” section of the solicitation resolved the ambiguity.

Active interference, as opposed to mere hindrance, is a well-recognized exception to the enforceability of no-damages-for-delay clauses. However, it is a distinction that defies a bright line demarcation. A federal appeals court recently grappled with this distinction and came up with an unusual result.

A prime contractor’s failure to provide compacted earth temporary work stations in accordance with the terms of a subcontract constituted active interference with the subcontractor’s work. The muddy conditions prevented the subcontractor’s performance and necessitated the purchase of mats. The high labor costs incurred in moving the mats from work station to station, however, resulted from a mere hindrance.

The second case in this issue involves liquidated damages for late completion. Although the contractor was not responsible for the majority of the late completion time, the project owner did not lose the right to assess liquidated damages for the remainder of the late completion period. Responsibility for the delay could be apportioned.

The third case addresses a state transportation authority’s change in standard specifications affecting bid bonds and bid responsiveness. The new spec could not be applied to bids submitted prior to the effective date of the revision.

Active interference, as opposed to mere hindrance, is a well-recognized exception to the enforceability of no-damages-for-delay clauses. A federal appeals court, applying Florida law, produced an unusual result when distinguishing the two actions.

Although a contractor was not responsible for the majority of the delay resulting in late completion of the project, the owner could still enforce the liquidated damages clause against the contractor—but only for the portion of the delay that was neither excusable nor compensable.

A low bidder’s bid bond conformed to the bid instructions and the agency’s standard specification in effect on the date of bid opening. The agency could not retroactively apply a revision to the standard specifications altering the requirements of the power of attorney form.

The prospective, contractual waiver and release of mechanic’s lien rights is often viewed with disfavor. In some states, lien rights are not just created by statute; they are enshrined in the state constitution. And generally, “no liens” clauses are narrowly construed to limit their impact.

A Louisiana appellate court recently stopped short of ruling a “no liens” clause unenforceable, instead allowing the contractor to maintain a mechanic’s lien because of the project owner’s prior breach. The owner had refused to pay for approved change order work.

The other case in this issue involves a municipality’s decision to deviate from the competitive bidding requirements. The city contended a backlog of necessary street repair work was a public health and safety threat.

Payment for work performed under approved change orders became due immediately upon completion. The project owner’s asserted set-offs against payment were not valid. The owner had breached the contract and could not enforce a “no liens” clause with regard to a mechanic’s lien securing payment on the change orders.  

Texas competitive bidding statutes require award of a single construction contract to the low responsible bidder, but there is an exemption for matters affecting public health or safety. That exemption could be applied to award multiple “on-call” contracts to address a backlog of street repair work.