Construction Law Blog - Settlements/Releases

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Posted By: John P. Ahlers | Aug 17, 2009 | Topics: Change Orders, Construction News and Notes, Delay Claims, Government Contracts, Settlements/Releases | View Article

Bell BCI Co. v. United States - Release of Cumulative Impact Claims

Bell involved a construction contract under which the government issued an extensive series of change orders. Following the first of those change orders, the parties executed Modification 93, which stated in part the increased contract amount set forth in the Modification represented "full and equitable adjustment for the remaining direct and indirect costs of the [changed work] . . . and full and equitable adjustment for all delays resulting from any and all Government changes transmitted to the Contractor on or before August 31, 2000." Modification 93 also included the following "release" language: "the Modification agreed to herein is a fair and equitable adjustment for the Contractor's direct and indirect costs. This Modification provides full compensation for the changed work, including both Contract costs and Contract time. The Contractor hereby releases the Government, including all liability under the Contract for further equitable adjustment attributable to the Modification."

Posted By: John P. Ahlers | Mar 26, 2008 | Topics: Settlements/Releases | View Article

A Release in a Settlement Agreement is Not Effective Until All Amounts Due are Paid

An employee and his employer entered into a settlement agreement concerning a severance and salary dispute that required the employer to pay $50,000.  When the employer failed to make the payment due under the settlement agreement, the employee filed a lawsuit claiming the settlement agreement was void because the consideration specified in the agreement had never been paid and sought to recover the original claim amount rather than the $50,000.  The employer counterclaimed, asserting that the settlement had been made and that the employee's recovery was limited to $50,000.  That is the employer's position was the employee was bound to the $50,000 settlement even though the employer had not made the payment as promised.  The employer argued that its "promise" to pay $50,000 precluded the employee from pursuing its original claims, since the original claims had been released due to the employer's "promise."  The employer's stance was that the settlement was a "substituted" contract that upon signing by the employee immediately and forever extinguished the employee's previous claims.