Construction Law

Cardinal Change

a change that is substantially different than the original project

Constructive Change

an owner’s actions that require extra work to be performed that would’ve otherwise been a change order

Implied Warranty of Fitness

owner does their best to provide reasonable and accurate plans and specifications

Promissory Estoppel

one who justifiably relies on another’s promise should not suffer consequences caused by the other party failing to make good on their end

Spearin Doctrine

the owner has a responsibility to ensure plans given to the contractor are as accurate as possible, or contractor can profit through change-orders

“Time is of the Essence”

this phrase contractually punishes the contractor for late completion

Liquidated Damages

A good faith estimate of losses per diem of late completed, and must be proven even in “time is of the essence” clauses

Excusable Delay

Extreme and out of contractors control; force majeure, omission from owner, designer authorized delay, unnatural weather, infrastructure failure

Compensable Delay

A delay that results in more money to the contractor, due to actions owner/designer

Constructive Acceleration

Owner denies a change order request, leading to an accelerated schedule at the contractor’s expense

No-Damages for Delay Clause

Protects the owner from having to pay for causing delays if done in good-faith

To avoid unexpected damages resulting from delayed construction, a contractor should ensure

The contract includes a list of compensatory and incompensatory events

Course of Performance

Observed actions of both parties that can indicate their intents

Course of Dealing

Observed previous actions of party with similar language

Usage of Trade

Any widely accepted trade custom or practice

Precedence Clause

Indicate if specifications take priority over drawings; otherwise courts assume harmony

Order of Precedence

Specific language takes precedent over boilerplate, regardless of document type

Patent Ambiguity

Obvious conflict between documents that the contractor must in good faith submit an RFI to clarify

Latent Ambiguity

Conflicts only apparent in the field, and are basis for compensation

Contra Proferentem

When courts cannot reasonably solve an issue, it is levied against the party that wrote the contract

Spearin doctrine does not protect the contractor is a design was more expensive than intially anticipated, however it does

protect contractors against fault plans or a bad-faith owner

Prescriptive Specification

Conveys explicit workmanship quality and materials

Proprietary Specification

Lays out specific brands or supplier, contractor is entitled to compensation if they are impossible to obtain

An “or equal” clause must be

Approved by the designer beforehand

Testing the performance of a material or product is the

Responsibility of the contractor

Output Specifications

Convey qualitative and quantitative criteria that can be tested by the contractor

General Conditions

Boilerplate document that includes various clauses and suggestions

Failed Conditions can result in

Postponement, modification waiver, or recession, but can NEVER breach a contract

Materials Breaches

Evidenced by substantial failure perform a contract, excuses innocent party of their performance

Suspension by Owner for Cause

Stop work notice is issued when contractor repeatedly fails to perform in accordance with contractor documents

Termination by Contractor for Cause

Allows not at fault contractor to terminate when work stoppage is above 30 days for specified contract reasons, can only occur if Owner is at fault

Termination by Owner for Cause

Allows Owner to terminate when Contractor disregards law, is guilty of a material breach, or fails to pay subcontractor

Consequential Damages

Secondary costs after actual damages are incurred

Patent Defect

Ordinarily defective performance revealed in a normal inspection

Latent Defect

Significant act or omission not encountered during inspection

Warranty Work

When a contractor must correct work that did not meet implied or expressed warranty

Material breaches can no longer be claimed once

a project reaches substantial completion

At Final Completion, the contractor is

paid entire amount and retainage is released

After a Final Completion, a contractor still remains liable for

latent defects and frauds after acceptance

In California, the statutes of limitations for patent defects are

4 years after substantial completion, must have court action within 1 year of incident

In California, the statutes of limitations for latent defects are

10 years after substantial completion; however injury or death has no time-limit

Owner must notify contractor of a defect in writing within

1-year; contractor must reimburse owner’s cost

Project Neutral

Set of Construction Experts that hold regular meetings that avoid or settle disputes before they become disruptive

Mini-Trial

Non-binding dispute resolution that focuses on executives and mediator; usually with intention to settle

Summary Jury Trial

Non-binding and invention of federal courts; lawyers of each side are present and the goal is to guage strength and weakness before real litigation

Mediation

Private informal process where neutral third party helps facilitate a settlement

If mediation cannot reach a settlement that makes each side “equally unhappy”, then

Arbitration occurs, which picks one side as a clear winner

Arbitration

Binding dispute resolution where arbitrator conducts a hearing and makes a decision that courts will enforce

Litigation

A lawsuit with a court having legal jurisdiction; involves discovery, interrogation, entry to land, and general evidence gathering

Deposition

record of live testimony by someone knowledgeable about the case to establish facts

A responsive bidder must

Comply with all material requirements of a solicitation with no deviation

A responsive bidder should NOT

Insert their own clarification or substitution that can be considered material

A responsible bidder has

Necessary character, experience, performance, and financial resources necessary to do the job

Performance evaluations are recorded by the

Federal Government, which help determine bid selection