Active interference, as opposed to mere hindrance, is a well-recognized exception to the enforceability of no-damages-for-delay clauses. However, it is a distinction that defies a bright line demarcation. A federal appeals court recently grappled with this distinction and came up with an unusual result.

A prime contractor’s failure to provide compacted earth temporary work stations in accordance with the terms of a subcontract constituted active interference with the subcontractor’s work. The muddy conditions prevented the subcontractor’s performance and necessitated the purchase of mats. The high labor costs incurred in moving the mats from work station to station, however, resulted from a mere hindrance.

The second case in this issue involves liquidated damages for late completion. Although the contractor was not responsible for the majority of the late completion time, the project owner did not lose the right to assess liquidated damages for the remainder of the late completion period. Responsibility for the delay could be apportioned.

The third case addresses a state transportation authority’s change in standard specifications affecting bid bonds and bid responsiveness. The new spec could not be applied to bids submitted prior to the effective date of the revision.

Active interference, as opposed to mere hindrance, is a well-recognized exception to the enforceability of no-damages-for-delay clauses. A federal appeals court, applying Florida law, produced an unusual result when distinguishing the two actions.

Although a contractor was not responsible for the majority of the delay resulting in late completion of the project, the owner could still enforce the liquidated damages clause against the contractor—but only for the portion of the delay that was neither excusable nor compensable.

A low bidder’s bid bond conformed to the bid instructions and the agency’s standard specification in effect on the date of bid opening. The agency could not retroactively apply a revision to the standard specifications altering the requirements of the power of attorney form.

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.