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.

AIA contract documents stipulate a three-step dispute resolution process: an initial decision, usually by the project architect; non-binding mediation and binding arbitration or litigation, as selected by the parties at the time of contract formation. What if a party is in a hurry and wants to cut right to the chase?

An appellate court ruled that participating in mediation was a precondition to a project owner’s right to sue a contractor for breach. The owner could not decline to invoke mediation and skip to litigation. The owner’s suit was properly dismissed with prejudice.

The second case in this issue involved the regulation governing the pricing of changed work on federal contracts. Field expenses may be calculated as a percentage markup on direct costs or as a daily overhead rate. But the contractor must be consistent for the duration of the project and the method must be consistent with the contractor’s established accounting practices.

The third case addressed the interplay between an “anti-assignment” clause in a subcontract and a state mechanic’s lien statute. The subcontractor’s failure to get the contractor’s advance written approval of a material supplier deprived the supplier of any lien rights against the project.

Under AIA Document A101 dispute resolution procedures, an initial decision by the project architect in favor of the contractor was not an arbitration award. The project owner, having failed to demand mediation after the initial decision, had waived the right to litigate its claim against the contractor.

FAR 31.105(d)(3) allows field office expenses on change order work to be priced as either a percentage of direct cost or as a per-diem charge, but it requires consistency. An impermissible switch can result in forfeiture of field expenses.

The terms of an “anti-assignment” clause in a subcontract, combined with the requirements of a state mechanic’s lien statute, rendered a supplier to the subcontractor ineligible for lien protection.

A purchaser of allegedly defective property will quite naturally seek recourse against all involved parties. An obvious target would be a trade subcontractor whose workmanship is called into question. However, a recent Ohio case illustrates the strict limitations on such recovery.

A property purchaser sued a trade subcontractor to the builder-vendor for unworkmanlike performance of the subcontract. The buyer had no contractual relationship with the trade sub. Would the court impose a common-law duty of workmanlike performance on the subcontractor?

The other case in this issue involved a contractor’s voluntary assumption of administrative functions that were assigned to the government under the terms of a construction contract. The contractor assumed the functions in order to expedite delivery of materials to the job site. Would the contractor then assume the increased costs when, through no fault of the contractor, the administrative efforts went awry?

A trade subcontractor to a builder-vendor of property had a contractual obligation to the builder, but the subcontractor had no contract with the eventual buyer of the property and owed the buyer no common-law duty of workmanlike performance.

The U.S. government was entitled to a customs duty exemption on imported construction materials on an overseas project. The contractor assumed responsibility for administering the process of obtaining reimbursement in order to expedite delivery of materials. This voluntary assumption did not, however, relieve the government of the ultimate obligation to obtain the reimbursement to which the government was entitled.