Volume: 19, Issue: 9 - 05/17/2021
Many states require a “certificate of merit” as a threshold to a malpractice suit against a design professional. Intended to weed out frivolous claims, the certificate must be signed by a similarly licensed professional in the same jurisdiction. And, the certificate must attribute specific costs or losses to specific alleged shortcomings of the individual design professional. The first case this week deals with a malpractice suit where two different architects sealed the same set of construction-ready documents.
The second case this week deals with an off-site supplier qualified as a subcontractor for the purpose of filing a mechanic's lien. This week's third case involves a contractor who lost a claim for failure to follow notice provisions in the contract. Read more.
Where two architects sealed the same design documents without allocating responsibility, the architects could not invalidate a certificate of merit in a malpractice action by arguing the certificate failed to attribute specific errors or omissions to a specific architect.
An off-site fabricator qualified as a subcontractor under mechanic’s lien statutes. The fabricator furnished substantial labor in accordance with drawings and specifications unique to the project. No on-site labor was required.
The 20-day written notice requirement in the standard federal Changes clause is strictly enforced. In the absence of such notice, a contractor was not entitled to payment for 16 “change order” invoices. The contractor’s default was not excused by nonpayment.
Volume: 19, Issue: 8 - 05/03/2021
When confronted with a costly site condition, contractors are sometimes quick to claim it is a compensable “differing” site condition. This raises the question, “differing” from what? As a general rule, the condition must differ from an affirmative representation in the contract documents; however, silence or failure to alert is not a positive indication. And, the contract documents, when read as a whole, may have been sufficient to put an experienced contractor on notice of the condition it encountered. This week's first case left the contractor with extra costs for a condition not explicitly depicted in the contract documents but was neither a changed condition nor an unusual condition.
The second case this week deals with a low bidder on a project had its bid rejected for being unbalanced. Read more.
Although contract drawings did not expressly warn that an existing subsurface utility line was concrete-encased, depictions and labeling in the drawings put the contractor on notice of that fact. This was not a Type I differing site condition. And, the concrete encasement was more usual than not, so it could not be a Type II differing site condition.
The extreme front loading of a low bid created a risk the contract balance would be insufficient to pay for completion of the work in the event of a contractor default. The bid was materially unbalanced, and the public project owner was obligated, under the terms of the solicitation, to reject the bid as nonresponsive.
Volume: 19, Issue: 7 - 04/15/2021
Construction contracts with an unlicensed contractor are, in most states, null and void. (The contractor may or may not be able to recover payment on equitable grounds.) The purpose is to protect the public by depriving unlicensed contractors of any rights under an improper contract. It comes as a surprise, then, to find a situation in which the nullity of a contract worked to the benefit of an unlicensed contractor.
This case is accompanied by two federal appeals cases, one dealing with pre-existing liens and the other a performance bond. Read more.
A joint venture in which one member was not a licensed contractor could not be considered a licensed contractor. A construction contract awarded to the joint venture was null and void. The project owner could not enforce the indemnification clause in the contract against the contractor.
A construction lender insured the title to its collateral, the project real estate. But the lender agreed to eliminate coverage for mechanic’s lien rights for issues prior to the policy date. As a result, the lender had no coverage for the precise factor that caused it to incur a $4.9 million loss on its loan.