Volume: 19, Issue: 14 - 08/02/2021
Almost every default termination clause ever written treats nonconforming, noncompliant work as an act of default, a breach of contract. However, if construction contracts were terminated every time there was a workmanship issue, nothing would ever get built. Consequently, default clauses generally give the contractor an opportunity to correct the noncompliant work and cure the default. The first case in this issue discusses a recent decision by the Supreme Court of Washington where a municipal owner's default termination was ruled improper for failure to provide that opportunity.
The other case in this issue involved a federal agency’s duty to inform a contractor of its right to appeal the denial of a claim. When the government contracting officer provided inaccurate information, the 90-day appeal period did not start to run. The ruling came despite the fact the correct information was readily available on the Board of Contract Appeals website. Read more.
A contractor was contractually entitled to an opportunity to correct defective work, and the project owner had a duty to consider the contractor’s remedial plan in good faith. The owner’s failure to do so resulted in the reversal of a termination for default and conversion to a termination for convenience.
A contractor’s 90-day period to file an appeal of a contracting officer’s final decision did not start to run until the government provided adequate notice of the contractor’s appeal rights. Written notices misstating the name of the Board of Contract Appeals were inadequate. A correct reference to the board website, furnished six hours before expiration of the time period, still left the contractor in a prejudiced position.
Volume: 19, Issue: 13 - 07/15/2021
Most state mechanic’s lien statutes allow successful lien claimants to recover reasonable attorney fees incurred in the foreclosure of a lien. The foreclosure process is necessarily judicial; in today’s environment, however, the underlying determination of entitlement to payment may be made through some form of alternative dispute resolution. Are attorney fees incurred in those proceedings recoverable under a lien statute?
An Iowa appeals court recently answered this question in the affirmative. A subcontractor’s attorney fees incurred during binding arbitration of its payment dispute with the prime contractor were permissible. The reasoning was that without the subcontract’s arbitration clause, the question of entitlement to payment would have been before the court in the lien foreclosure action.
The other two cases in this issue involve default termination on a federal contract and enforcement of a payment bond clause in a subcontract in Florida. Read more.
An arbitration award in a subcontract dispute was integrally related to the subcontractor’s lien foreclosure suit. The trial court had discretion to award the sub attorney fees incurred during the arbitration proceeding pursuant to the state mechanic’s lien statute.
A terminated contractor failed to challenge a default within one year and could not later assert monetary claims that were premised on the assumption of wrongful termination. The contractor could, however, maintain claims for unpaid invoices for work completed prior to termination.
A subcontract stipulated a venue for suits, but a payment bond furnished by the prime contractor did not state a venue. The subcontractor sued the surety under the bond but did not name the prime contractor as a party or allege breach of the subcontract. The “venue selection” clause in the subcontract did not apply to the action against the bond.
Volume: 19, Issue: 12 - 06/30/2021
The first case this issue involves an unusual situation where a claim on a government contract was denied because the amount claimed was not separated into separate subtotals corresponding to the two separate entitlement issues expressed in the claim, and thusly did not meet the "sum certain" as defined in the Contract Disputes Act. The second case this issue finds that a general contractor improperly withheld retainage on a subcontractor when the sub refused to perform additional work with a change order or by the sub's failure to provide an engineer's stamp, which was not required by the contract. Read more.
A contractor’s claim amalgamated delay during the design and construction phases of the project. While the claim stated a precise amount, it failed to apportion damages, or a “sum” certain, between two distinct events as required by the Contract Disputes Act. It was therefore dismissed for lack of jurisdiction.
A prime contractor did not have a good faith defense for its refusal to release subcontractor retainage. Extra work was not required without a written change order, and extra-contractual requirements could not be imposed on the subcontractor.