Construction Law Blog
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From 1888 through 2007, general contractors and architects met and agreed on the standard construction terms and conditions that are in the American Institute of Architects' ("AIA") "family" of documents.[i] The AIA documents are probably the most commonly used construction forms for building projects in the United States. The AIA, through its forms, seeks to strike a balance between the interests of the owner, contractor, and the design professionals. Borrowing a phrase from Fox New anchor Bill O'Reilly (Bill did not coin this phrase), the AIA documents seek to be "balanced and fair." The AIA contracts shift and allocate risk with three philosophical tenets in mind: (1) controllable risk is allocated to the party best able to control the risk; (2) preventable risk is allocated to the party best able to protect against an unexpected cost (sometimes through insurance); and (3) if neither party can control or prevent the risk, it is shifted to the owner.
Design-Build Contractor Held to Same Different Site Condition Standard as Design-Bid-Build Contractor
In September 2012, we reported on the case of Metcalf Construction Co., Inc. v. United States, in which the U.S. Court of Federal Claims held Metcalf Construction Co., Inc. ("Metcalf"), a design-build contractor, to a very high standard of proof to demonstrate a differing site condition. Read our blog article about the Federal Claims Court's decision here. In that decision, the court took the position Metcalf had assumed the risk of subsurface conditions because it was a design builder and thus, was obligated to prepare a design that would accommodate conditions that differed significantly from the soils that were described in the government's RFP report. The court relied heavily on the disclaimers in the RFP soils report, which stated they were for "preliminary information only."
Today, we can almost always communicate immediately in some way, shape, or form because we are always connected with our electronic devices. We can tweet, text, or email a "running a little late" note at any time and having that ace up our sleeve, with no consequences to using it, has led to more delayed meetings than I care to count. New York Giants' head coach, Tom Coughlin, is notorious for his insistence that his players show up punctually. If his players showed up to a meeting "on time," they were actually late. Coach Coughlin wants his players arriving to the meetings early, prepared, and ready to go at the start of each meeting. If players failed to adhere to this philosophy, there were consequences. Government contractors might be wise to adopt Coach Coughlin's "if you're on time, you're late" philosophy when submitting bids and proposals.
On January 17, 2014, the Texas Supreme Court ruled that a Contractual Liability Exclusion contained in a general liability insurance policy did not preclude coverage of a general contractor for a claim arising out of its defective work merely because the contractor agreed to perform its work in a "good and workmanlike manner."
This post primarily pertains to federal government procurement, however, many of the practice pointers and issues apply to state public works contracts as well.
On January 23, 2014, the Oregon Court of Appeals held that a general contractor’s offer to modify a subcontract upon acceptance by subcontractor was an insufficient form of tender to cut off the general contractor’s obligation to pay prejudgment interest.
In recent posts, we discussed termination-for-convenience provisions in construction contracts, noting that such provisions appear in both governmental and non-governmental contracts. Construction Contracts Termination Basics - Part I; Part II. This post provides more detail on the state of the law on such clauses in Washington.
When confronted with extra costs on construction projects caused by architects and engineers who were hired by the owner (and have no contract with the contractor), contractors are generally inclined to seek direct recourse against the perceived wrongdoers. Generally, unless there is some personal injury or property damage involved, however, the "economic loss rule" precludes the contractor from suing an entity with whom it lacks privity of contract.
On January 9, 2014, the Washington Utilities and Transpiration Commission ("UTC") announced that it has fined two utility companies, Pacific Power and Light Co. ("Pacific Power") and Frontier Communications Northwest, Inc. ("Frontier"), under Washington's new Underground Utility Damage Prevention Act (the "Act"). These are the first two penalties issued by the UTC since the Act took effect on January 1, 2013.
Recently, Division II of the Washington Court of Appeals held that a Pierce County contract with a son's proprietorship was illegal, void, and unenforceable when the project was competitively bid by the father's proprietorship and awarded to the father by the County. Bankston v. Pierce County, 174 Wn.App. 932, 301 P.3d 495 (Division II, May 21, 2013).