Control over the activities of another party generally creates a corresponding duty to use due care in the exercise of that authority. This includes the duty to avoid unnecessary economic harm. Contractual disclaimers may not effectively negate this responsibility.
A project architect had authority to advise the owner regarding the rejection of nonconforming work, withholding of contractor payment, and termination of the construction contract for default. A Florida court ruled that this was sufficient supervisory control over the contractor to allow the contractor to sue the architect for professional negligence after a default termination. The architect owed the contractor a duty of due care notwithstanding a contractual disclaimer of contractor third-party beneficiary status.
The other case in this issue involved the scope of mechanic’s lien protection. A Michigan court ruled that a lien could cover only the contract price less contract payments received. The lien could not secure the project owner’s payments for consequential damages caused by the breach of the construction contract.