You know the drill – you learn about a project and you submit a bid. The bid is usually your own form, setting forth cost of materials and labor, and your contact information. This bid is an opportunity for you to incorporate some terms to improve your bargaining position with the general contractor. Some terms to consider are: Void Date. You could make your bid void unless it is accepted, [...]
As we wind down 2012, it’s a good time to look back and see where we've been. If the Construction Contractor Advisor had any themes beyond construction law, they were to know the terms of the contract and comply with those terms. Know Your Contract Every week I read about disputes that were caused by the parties’ differing interpretations of their obligations under a contract. These disputes often times relate to: Scope [...]
Litigating a construction claim can be difficult. Figuring out which claims you have against the various parties can often times take months to figure out. A recent case out of South Carolina illustrates these difficulties. In Ross Dress For Less, Inc. v. Lauth Const. Group, LLC, a developer hired a general contractor to build a warehouse. The general contractor hired a geotechnical engineer to inspect and test the soil to [...]
You have to deal with a big mess. A recent case from the Board of Contract Appeals illustrates some problems that can occur. In CPR Restoration, LLC v. Department of Veterans Affairs, CPR performed $280,000.00 worth of restoration and cleaning services and then sought payment from the VA. The VA refused, claiming that the individual that signed the contract was not authorized to sign the contract. CPR brought a claim [...]
Construction contracts often times contain forum selection clauses, especially when the general is from out of town. Are you reviewing your contracts to see where you might have to litigate--at home or somewhere far away? What are forum selection clauses? Forum selection clauses dictate where litigation stemming from the project may be brought. Forum selection clauses may be voluntary, in that the parties to the contract consent to the jurisdiction [...]
Whether you are a general contractor or subcontractor, do you pay attention to those provisions of the contract that dictate who is responsible for the safety of your workers? If a worker is injured on the job site, the safety provisions may play a significant role in determining who is liable for the worker’s injuries. A recent Indiana Supreme Court case addressed this very issue. In that case, a concrete [...]
As promised, here are a few more necessary steps to set up a Contract Administration System. You can find the first two steps here. Today, we’ll discuss contract risks and the theories you may pursue to recover your damages, along with checklists for making common claims. Who is Responsible for the Risk? It is important to consider who is responsible for the risk associated with the project. When considering who [...]
How well do you communicate with your bonding company when you receive notice of a claim? A recent case out of Indiana highlights the problems that can occur if you do not investigate the claims and timely report back to the bonding company. In this case, the bonding company was contacted by various subcontractors demanding payment. The bonding company called the contractor to investigate the claim. It took several weeks [...]
Amending your construction lien is not as easy as you might think. You cannot simply revise the dollar amount of your claim or the location of the property, if you didn't have it right the first time. Nebraska statutes require more information in the amended lien. And, if you don’t include it, you run the risk of your lien being declared invalid. Nebraska § 52-148 authorizes the amendment of construction liens, but [...]
The Nebraska Court of Appeals recently decided a construction defect claim that illustrates the frustration that may result with taking a case to trial. After one trial and two appeals, the Court of Appeals sent the case back to the trial court to try the case a second time. And, this was over a $15,000 claim. This is one of those situations where someone is saying, “Only the attorneys got [...]
For those of you working in Iowa, beware of the time limits by which you must make bond claims. On public works projects in Iowa, you have a very limited window to make your claim and the process can get even more complicated if the contractor abandons the project. Iowa’s statute on public works bonds provides that general contractors must pay subcontractors within seven days of payment for the subcontractor’s [...]
Earlier this month, a judge in Albany, New York, invalidated a government mandated Project Labor Agreement (PLA), finding that the New York Department of Transportation failed to demonstrate that the PLA advanced the interests of the state’s competitive bidding statutes. A copy of the opinion can be found here. The Court’s decision took the Department of Transportation (“DoT”) to task, ultimately finding that the DoT failed to support its decision [...]
Do you review the payment terms in your contracts? Do they contain a Pay-if-Paid clause? Did you know that this clause can bar your claim if the owner does not pay the general contractor? Pay-if-paid clauses can be very complicated, but well worth reviewing so that you can adequately gauge your risk before you take on a project. A recent case highlights the problems that a pay-if-paid clause can cause. [...]
Construction contracts often contain notice provisions that a subcontractor must follow to request additional compensation for work performed. While the notice provisions are generally straightforward, they are often one sided and a subcontractor’s failure to follow them may bar the subcontractor’s claim. A common form of change order is found in the AIA A201, which provides: Claims by either the Owner or Contractor must be initiated by written notice to [...]
As a general contractor, you hate to hear that your subcontractor will not honor its bid. But, there are remedies. You may even be entitled to expectation damages – the difference between what you thought you were going to pay the old subcontractor and what you paid the new subcontractor. When a subcontractor submits a bid on which the general contractor relies in bidding a project, the general contractor may [...]
How often have you started working on a project without a signed contract? My experience has been that subcontractors do it all the time. But, what does it mean? A recent case out of Montana sheds some light on this issue. In this case, the subcontractor submitted its bid to the general contractor. The GC signed the bid on the acceptance line, but wrote in “pending contract with the owner." After the [...]
Contractors often complain that while government contracts are good for business, the governmental bureaucracy is oftentimes more hassle than it is worth. A recent decision of the Boards of Contract Appeals and the Comptroller General drives this point home. In this recent situation, a service-disabled veteran-owned small business was the low bidder on a Department of Veteran Affairs project. However, the contracting officer determined that the low bid was unreasonably [...]
I came across a Linked-In post the other day in which an attorney was asking whether he should add any extra language to an AIA agreement between the owner and contractor. This question got me wondering how many construction companies ponder the same question. Here are some questions to think about as you wait for the holiday party to start. Should your attorney review the contracts you are signing? And, [...]
A friend of mine, Cordell Parvin, retired construction attorney and now legal consultant, recently shared a list of core competencies that he expected new construction attorneys in his firm to learn. Here is a copy of his list. It covers everything from general knowledge of the construction industry and construction law, to contract drafting and dispute resolution. It also contains a few items that I need to brush up on. It also got me thinking [...]
Did you know that you may be able to limit your liability on a construction project? Limitation of liability provisions are enforceable in Nebraska and may provide an effective method to limit your liability. Limitation of liability clauses generally set forth the upper limit a contractor may be liable for the work it performs. These clauses often times contain language like: Contractor’s maximum liability to Owner for all damages shall [...]
Well, it depends. Client questions and case law abound with questions about change orders and whether they really need to be in writing. Although Nebraska courts have not dealt with the issue in a while, courts around the country have recently addressed this question and it always comes down to the specific facts involved. But, if your contract requires a change order in writing, you would be well advised to [...]
What is the one step most contractors forget to do when filing a lien? They forget to send a copy of the lien to the contracting owner. And, if you don’t send a copy of your lien, the lien may be invalid. Section 52-135 Nebraska Revised Statutes discusses the specifics of a lien, including the notice of right to assert lien and the necessary content. Buried in the third paragraph [...]
Did you know that your lien may be voided if it is filed in bad faith or you refuse to execute a release of lien? It’s true. And, if a court finds that you did act in bad faith, it may award attorney fees to the owner. That would be a bad turn of events. As some of you may know, section 52.157 of the Nebraska Construction Lien Act addresses [...]
Unfortunately, it does not appear that the construction industry is headed for a turnaround, yet. Last week, the U.S. Department of Commerce, Housing and Urban Development issued a report on new residential construction through August, 2011. The report noted that housing starts were down 5 percent from last July, which is the lowest it had been in three months. And this represents less than half the number of homes that [...]
Our clients are often times frustrated at the lack of clear delegation and responsibility on GREEN building projects, such as those pursuing Leadership in Energy and Environmental Design (LEED) designation. While LEED projects mandate an integrated process and seek input from all parties, there is very little guidance as to each party’s obligations. To avoid this confusion, we recommend contractors take some preliminary steps to clarify their duties and responsibilities [...]
Last week we blogged on documentation to support the amount of a construction lien. This, however, is just the tip of the documentation iceberg. For those of you who have experienced construction litigation, you know the large number of documents involved in a case. And, perhaps you are familiar with the awkward feeling of not being able to locate fundamental documents, like the signed contract. A good documentation system will serve [...]
If you are a contractor doing business in Nebraska, you should be registered under the Contractor Registration Act. Although the registration requirements are not difficult, the penalties for failing to register can be significant.Under the Contractor Registration Act , all contractors performing work in Nebraska, both Nebraska and out of state companies, must be registered with the Department of Labor and obtain a registration number. The registration process is available on-line [click here] [...]
More contractors and subcontractors are having trouble getting paid for their work. While an owner losing financing is nothing new, subcontractors are more and more finding pay-if-paid clauses in their contracts that arguably prevent them from pursing the general contractor for payment. What can you do to minimize this risk? Read Your Contract I know this sounds obvious, but pay-if-paid clauses can get stuck deep in the contract. And, after [...]
The Office of Federal Contract Compliance Programs (OFCCP) has proposed changes to its Scheduling Letter and Itemized Listing that it uses to announce audits to contractors. While the OFCCP claims it is trying to reduce the overall burden on contractors, the proposed changes, if allowed, will greatly increase the documentation contractors subject to OFCCP audits must turn over or make available. As some of you unfortunately know, the OFCCP’s Scheduling Letter [...]
I have yet to meet a client who has enjoyed being involved in a lawsuit. The cost of a large document production, the stress of sitting for depositions, and the time to prepare for trial can weigh heavily on a company and its owners. But, there are some steps that you can take to limit, if not avoid, being sued. Know the terms of the contract. You must know and [...]
This is the first in an ongoing series discussing construction contracts. Would you ever agree to a contract without knowing the terms? Most contractors would say no, perhaps a bit more emphatically. But, it happens every day—where contract terms that you have never seen are incorporated into the contract by reference. Be on the lookout for phrases that incorporate external terms or standards to make sure you know what you [...]
Green or sustainable building has become a focal point in the construction industry. And, with sustainable building contracts come green building obligations. Contractors and subcontractors have to make sure they understand these requirements for “green” projects. LEED (Leadership in Energy and Environmental Design), created by the USGBC (United States Green Building Council) is the leading method for “green” certification. The LEED rating system has a number of requirements, just a [...]
Have you ever wondered if you can limit your liability on a construction project? Well, there are ways that this can be done. Nebraska courts have allowed contractors to limit their liability, but only in limited circumstances. The contract might contain a waiver of subrogation clause. This means that if the owner’s insurer pays for damage, even if it’s caused by the contractor, the owner cannot pursue claims against [...]
Our clients often ask how they can best protect their rights on a public construction project because they know they can’t file a lien. Contractors on public projects must be very careful about protecting their claim because there are very specific steps that must be followed. Nebraska statute section 52-118 contemplates two types of situations--those in which the subcontractor or supplier has a contract with the contractor and those [...]
I’m sure you all recall OSHA’s big press release last year when it announced revisions to its penalty framework to increase penalties. Well, OSHA is now using the revised framework and the penalties are stiff. A review of OSHA penalties in Region 7, covering Iowa, Kansas, Missouri, and Nebraska, shows significant penalties. A stucco company in Kansas was fined $147,000 for two repeat and one serious violation where employees [...]
