Construction Law Blog - Delay Claims

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Posted By: Kevin Kaiser - Surety Bonds.com | May 07, 2010 | Topics: Claims, Delay Claims, Liens/Bond Claims | View Article

Construction Bonds and Surety Companies: What You Need to Know

Surety bonds are an often hidden yet critical component of doing business in a wide variety of industries. Many types of professionals are required to be bonded, including car salesmen, janitors, nursing home staff, and construction workers, and each bond’s primary focus is to protect against fraud or misconduct on the part of the bonded individual. Generally required by state, local, and federal agencies, surety bonds are in place primarily for consumer protection. If the bonded company or individual is found to be engaging in unethical or fraudulent activities, the wronged party can file a claim against the bond and receive compensation (paid for by the bonded company) up to the full face value of the bond if the claim is found to be valid. Surety bonds are exceedingly common in the construction industry and in fact, construction bonds are some of the most common surety bonds on the market today. If you’re a contractor, therefore, it’s critical that you find a bond company you trust and can rely upon to provide you good customer service when it comes to executing your bonds. Here are a few helpful tips to ensure that your choice is a good one.

• Pick an Experienced Provider. Professional surety companies with an extensive history of providing bonds can be a great partner for your business. Not only can they make the bonding process itself a smooth one with a well established underwriting routine, but they can also provide you with a great assessment of your business and its prospects. Check with the National Association of Surety Bond Producers to ensure that your potential surety company has a proven track record of success.

• Make Sure They Understand your Industry. Your surety company should have a well educated and experienced understanding of not just surety bonds, but the construction industry in general. Their awareness of the market will help determine the types of products they provide and the options they present.

• Understand the credit and underwriting process. Make sure that the underwriting standards and the credit criteria against which you will be evaluated is clear and easily understood. Your financial history is a critical component of the bonding process and it’s exceptionally important that you’re able to understand and follow the approvals process.

• Evaluate Industry Affiliations. Investigate what industry organizations and affiliations your potential surety partner maintains. The National Association of Surety Bond Producers is comprised of more than 5,000 surety agents and brokers and provides education and awareness. The Surety & Fidelity Association of America also maintains a large membership and is a well known organization in the industry.

• Go with Your Gut. Of critical importance is your own instinct. Trust yourself and, if something seems amiss, go elsewhere immediately. Surety bonds are a large investment and you need to feel that whatever company you choose is going to advocate for you and take a personal interest in your success.

This guest post was provided by Kevin Kaiser, a principal at SuretyBonds.com. AC-Lawyers in no way endorses the company but rather thought they provide relevant and useful information. If you want more information regarding surety bonds, visit their Surety Bond Education Program.

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: Brett Hill | May 07, 2008 | Topics: Claims, Damages, Delay Claims, Government Contracts | View Article

Idaho Court denies GC's claim against project engineer

In Beco Constr. v. J-U-B Engineers, Inc., the Idaho Supreme Court denied a general contractor's claim against the project engineer on a public project located in Pocatello.  The general had alleged that the engineer's improper conduct and delays resulted in delays to the general's work on the project and liquidated damages assessed against the general contractor.  The general had alleged that the engineer intentionally interfered with the general's contract with the owner.  The Supreme Court denied the general's intentional interference claim because the engineer, as an agent of the owner, was acting on behalf of the owner. 

Posted By: John P. Ahlers | Mar 17, 2008 | Topics: Delay Claims | View Article

“Pay When Paid” vs. “Pay If Paid” Clauses: Mystery vs. Myth

A "Pay When Paid" clause provides that payment to the Subcontractor will be made within a certain period of time after the contractor has been paid by the owner, rather than within a period of time after the subcontractor has performed its work.  Generally, "Pay When Paid" clauses are interpreted to merely postpone payment for a reasonable time.  "Pay When Paid" clauses do not excuse an unpaid prime contractor from all obligations to pay the valid invoices of subcontractors and suppliers. 

Posted By: John P. Ahlers | Mar 14, 2008 | Topics: Delay Claims | View Article

Impact of Shift Work on Labor Productivity for Labor Intensive Contractors

Generally, a contractor has three options in accelerating a construction schedule: working longer hours, increasing the number of workers, or creating an additional shift of workers.

Posted By: John P. Ahlers | Feb 26, 2008 | Topics: Delay Claims | View Article

Delays by a Contractor’s Supplier Do Not Fall Within the Prime Contract's Force Majeure Clause

During the construction of a tower and fiber optic line, the contractor was delayed by its supplier, causing the contractor to incur an assessment of liquidated damages.  The prime contract force majeure clause defined a force majeure event as: "Any reasonable delay which is due exclusively to causes beyond the control and without the fault of contractor . . ." (emphasis added).  According to the general contractor, it was entitled to a time extension because its supplier delayed the project.  The delay of the supplier was "beyond the control and without the fault of" the contractor.

Posted By: Ryan Sternoff | Jan 02, 2008 | Topics: Change Orders, Claims, Damages, Delay Claims | View Article

American Safety v. City of Olympia: Supreme Court Affirms and Clarifies Mike M. Johnson

Last month, the Washington State Supreme Court affirmed its holding in Mike M. Johnson and reversed the Division 2 Court of Appeals in Am. Safety Cas. Ins. Co. v. City of Olympia, __ Wn.2d __, __ P.3d. __ (2007). The case again demonstrates the Washington State Supreme Court's position that contractors must strictly comply with the notice and claim procedures in their contracts, absent an "unequivocal" waiver of those procedures by the other party to the contract.

Posted By: Brett Hill | Dec 28, 2007 | Topics: Damages, Delay Claims | View Article

Flour v. Walter - Severin Doctrine in WA?

The case had a complicated procedural history and facts are largely irrelevant for most of us, but there is one issue that may appeal to prime contractors. The Division I trial court applied the Severin doctrine to dismiss Flour's attempt to assert its subcontractor's claim against the owner.

Posted By: Brett Hill | Jan 02, 2008 | Topics: Change Orders, Claims, Damages, Delay Claims | View Article

Mike M. Johnson v. Spokane County - Contract Notice and Claim clauses are strictly enforceable

The seminal case in Washington regarding change orders and the enforceability of notice provisions in construction contracts. The Washington State Supreme Court held contractual notice provisions are strictly enforceable unless the clause has been waived by the party who benefits from the clause. The waiver must be "clear and unequivocal" for it to be valid.

Posted By: Brett Hill | Jan 03, 2008 | Topics: Claims, Delay Claims | View Article

Biwell Construction v. City of Seattle

In Biwell Construction v. City of Seattle, 1005 WL 763250 (Wash. App. Div. 1 April 4, 2005) (Unpublished Opinion), the Division One Court of Appeals held that a trial court improperly dismissed a claim for unpaid contract balance for failing to comply with the contract's claim requirements and the time limitation for suit provision.