Construction Contract FInal Vocab

Concurrent Delays

delays caused by both owner and contractor

Construction acceleration

owner doesnt give valid time extension forcing contractor to speed up

Directed acceleration

when owner tells contractor to speed up

Excusable delay

delay not contractors fault (owner, weather, strikes)

Non-Excusable Delay

delay that is Contractor’s fault (including subcontractors/suppliers)

Liquidated damages

establishes the damages contractor pays if work is completed after completion date

No Damage for Delay Clause

clause that contractor may not recover damages for delays only time extensions

Noncompensable delay

delay where contactor not at fault and gets more time but not money

Notice to proceed

official communication of owner telling contractor to start

Prospective and Retroactive approach

methods to determine if damage clauses are resonable

Majority Approach

prospective approach applied at time contract was signed

Additional Insured

a party added to another partys insurance

Bid Bond

bond ensuring owner is compensated if lowest bidder refuses to enter contract

Builders risk insurance

covers physical damage to building during construction

Commercial Liability Insurance

covers third party injury caused by construction

Damage Bond

bond where a surety(person of responsibility) pays owner if contractor fails to execute the contract

Professional liability insurance

covers claims over negligence in design

Forfeiture Bond

bond where owner reciever liquidated damages if bidder refuses to sign contract

Miller Act

requires performance and payment bonds on federal projects

Payment Bond

Bond that guarantees pay to subs

Performance Bond

bond that guarantees contractor completes project or pay

Subrogation

right to insurance companies to seek reinbursement from resposible party

Surety Bond

three-party agreement where the surety guarantees the performance or payment obligations of the principal to the obligee.

Application for Payment

Formal request from contractor detailing amount of work completed and requesting payment. Based on schedule of values

Mechanic’s Liens

legal claim filed against property by contractors who have not been paid. If unpaid there may be a force sell of property. State statue and not public projects

Pay-If-Paid

payment clause where subs are paid when contractor is paid. Courts require this clause to be explicit and unambiguous

Progress Payments

periodic payments made to contractor as work is completed. Based on percentage of work completed

Retainage

percent of each progress payment withheld by owner until project completion

Schedule of Values

detailed breakdown of all work items and values. Updated as project goes along

Stop Notice

statutory remedy that allows sub to place claim on funds against owner not property when not paid. Owner must stop paying contractor.

Anticipatory Breach

breach that occurs when a party refuses to perform contracted duties before performance is due

Express Warranty

contractural promises that the work will meet specific standards or include certain materials

Implied warranty

unwritten legal obligations requiring construction be performed completely and habitually. Includes warranty of habituality

Material breach

breach that is a significant violation of contract and causes other party to terminate contract

Minor breach

breach that does not defeat overall purpose and non-breaching party must continue but sue for damages

Negligent misrepresentation

tort claim where a party, design professions, has wrong drawings causing another party financial harm

Statue of limitations

legal time to bring a claim. Begins when defect is discovered

Statue of repose

law that doesnt allow claims after a certain time even if defect is discovered

Termination for cause

ending a contract due to not paying, bad performance etc.

Termination of conveneience

owner terminating without cause. Contractor is compensated for work performed etc

Unfair/Deceptive Trade Practice Act

state laws designed to protect consumers when there is misleading information like false promises and timelines

Warranty of habituality

new homes are safe and suitable for living

Final completion

occurs when all work is done. Triggers final payments and waiver of all claims in most cases

Punch list

list of all minor outstanding items

Substantial completion

point where project is completed enough for owner to use as intended

Uniform Commerical Code

set of laws governing transactions involving goods in construction

Clerk of the Works

inspects the workmanship, quality and safety of work on construction sites

limit of liability

max amount insurance pays for a covered loss

underwriting

process where insurance company evaluates a contractor to determine if a bond can be issued

surety, principal, obligee

three parties in a tripartitie relationship

indemnity provisions

shifts liability from contractor to sub when contractor is sued due to sub

Breach of Contract

common law standard for termination

proximate cause, breach, obligation, duty

4 parts of Negligence (PBOD)

fiduciary

somone acts on behalf of another

fraud, statue of limitation

defenses to a contract

Agency Relationship

cilent, agent, representative

interrogations and depositions

2 parts of the discovery phase of a lawsuit

mutual agreement

Formation fo contract needs

parol evidence

agreement that not in contract that can be used in court

personal, property, economic

3 interests that are protected in tort law

privity

a legal agreement

strict liability

contractor is a fault and lable for damages without having to prove uit

clause

a restrictive covenant

deed

document that transfers entire title of a property