Volume: 21, Issue: 22 - 11/30/2023
“No-Damage-for-Delay” clauses, if clear and unambiguous, can be an effective contractual assignment of the risk of construction delays. However, so many exceptions have been carved out that the enforceability of these clauses sometimes seems illusory. One widely recognized exception arises when the party seeking to enforce the clause has failed to meet its own contractual obligations.
Under the terms of a trade subcontract, a prime contractor was responsible for scheduling and coordinating the work. The contractor did a miserable job coordinating the trades, which forced the masonry sub to perform in a stop-and-start fashion and eventually accelerate the pace of its work in an effort to stay on schedule. Would the contractor be allowed to enforce a no-damage-for-delay clause against the subcontractor?
The other case in this issue involved a job site partially controlled by a third-party railroad. Could the railroad’s unanticipated use of its property constitute a differing site condition? Or, as a matter of law, did this not qualify as a site condition?
A contractor could not enforce a no-damage-for-delay clause against a subcontractor because the contractor had breached its contractual duty to schedule and coordinate the trade work. The subcontract requirement for timely written notice of alleged changed work did not apply to the sub’s acceleration claim, which was essentially a delay claim.
A Type 2 differing site condition—a condition so unusual that it could not be reasonably anticipated by a prudent contractor—does not exclude, as a matter of law, human activity at the site by a third party.
Volume: 21, Issue: 21 - 11/15/2023
The contract documents published by the American Institute of Architects are the most widely used private construction forms in the country. This prevalence is testimony to their comprehensive coverage of issues and balanced allocation of risk. There is another advantage to the AIA documents—they have been extensively interpreted by the courts thanks to decades of widespread use.
The first case in this issue involved a private project in which the construction financing was insured by HUD. The parties used a mandated HUD construction contract and the AIA General Conditions. The problem was that the two documents had conflicting provisions regarding release of the contract retainage.
The second case interpreted the progress payment provisions of the AIA contract documents. Were the monthly payments “partial payments” under a single construction contract or were they “installment payments,” each triggering a separate claim limitation period?
The third case in this issue involved a federal construction project. The agency’s specifications appeared to call for certain proprietary products. But perhaps the intent was to allow the use of “equal” products. If so, the agency had conducted a flawed version of a “brand name or equal” procurement.
The release of retainage provisions in a HUD construction contract form differed from the same provisions in the AIA General Conditions. Under the HUD contract, its terms governed any conflicting terms in the General Conditions. The HUD contract, as interpreted by the U.S. Court of Appeals for the D.C. Circuit, required the contractor to meet certain preconditions prior to entitlement to release of retainage.
Monthly progress payments under AIA contract documents were not installment payments arising out of separate transactions. They were partial, adjustable payments under a unitary construction contract.
Specifications for products were ambiguous because it was unclear whether only stated brands could be used or whether equal products were also contemplated. The specifications were also defective as a matter of law—they failed to list the “salient characteristics” the agency desired and incorporate the Federal Acquisition Regulation that governed “brand name or equal” procurements.
Volume: 21, Issue: 20 - 10/31/2023
Construction contracts commonly assign the risk of project-related property damage to a third-party insurer. Either the contractor or the owner, usually the latter, buys an “all risk” policy covering the site, and the owner and contractor reciprocally waive any claim against the other for insured property loss. The waiver expressly applies to any insurance company that might become subrogated to the rights to one of the parties. The scope of the waiver depends on the language of the contract.
A Maryland court recently confronted a situation in which subcontractors sought protection from an insurance company subrogation suit. The reciprocal waiver in question, unlike the waiver found in the AIA General Conditions, made no mention of subcontractors. Were the subs left exposed to the insurer?
The other case in this issue involves a statutory “Certificate of Merit” required for negligence suits against design professionals. If the defendant wanted to raise the lack of a Certificate as an affirmative defense, which party had the burden of establishing the defendant’s actual licensing status?
A reciprocal waiver of claims for insured property losses, found in a prime contract, protected only the project owner and contractor, not subcontractors. Unlike the AIA General Conditions, the reciprocal waiver referred only to the parties to the prime contract and made no mention of subcontractors.
A claimant’s failure to include a statutory Certificate of Merit with a negligence suit provided a design professional with an affirmative defense, but the defendant had the burden of asserting and establishing proper state licensing.