Notice of claim requirements in construction contracts receive mixed reactions in the courts. In some jurisdictions, if the project owner was well aware of the occurrences and circumstances leading to the claim, then the contractor’s failure to give timely written notice is of no concern. In others, the failure to comply with contractual notice requirements is an absolute bar to the claim. A state of Washington court recently demonstrated the latter approach.
A prime contractor initiated the dispute when it issued a project schedule change order to its subcontractor. The parties could not agree on a price adjustment. The sub’s later payment demand for the changed work was considered a claim, and its failure to give timely written notice was fatal to its claim even though the prime was aware of the facts and had initiated the situation with a change directive.
The second case in this issue addressed the definition of “substantial completion” of the work. It is traditionally considered the use or occupancy of the work for its intended purpose. However, a contract went further and required that all systems be fully operational in accordance with the design requirements. Would a Maryland court enforce this expanded definition?
The third case involved a federal contractor’s right to raise additional affirmative defenses to a default termination. A default is considered a claim by the government against the contractor. Therefore, a permissive approach is taken to a contractor’s assertion of affirmative defenses.