Fundamentals Of Construction Contracts & Litigation

I.               Construction Contract Provisions

a.             Overview

1.              Delivery Systems

a.              Design/Bid/Build

b.              Design-Build

c.               Construction Manager

                                                                            i.                   Advisor

                                                                          ii.                   At Risk

2.              Types of Contracts

a.              Written Contract

b.              Oral Contracts

c.               Express or Implied

b.             Standard Forms

1.              AIA

2.              Consensus Documents

c.             Owner/Contractor Agreement

1.              Contract Documents

a.              Form of Agreement

b.              General Conditions

c.               Supplemental Specifications

d.              Plans

e.               Specifications

2.              Payment

a.              Process

b.              Right to Withhold

c.               Lien Waivers

                                                                                 i.              Effectiveness

                                                                               ii.              Procedure

d.    Retainage

                                                                                 i.              Limits by Statute

                                                                               ii.              When Released by Statute

                                                                             iii.              Escrow Account

3.              Pay-When-Paid/Paid-if-Paid

4.              Change Order/Construction Change Directives

5.              Unforeseen/Changed Conditions

a.              Type I

b.              Type II

6.              Construction Schedule/Completion

a.    Right to Control – Who Owns the Float?

b.    Updates

c.     Time Extension

d.    Force Majeure

e.     No Damages for Delay

                                                                                 i.              Enforceability

                                                                               ii.              Exceptions

f.     Substantial Completion/Final Completion

7.              Liquidated Damages

8.              Termination

a.    Termination for Cause

                                                                                 i.              Notice

                                                                               ii.              Opportunity to Cure (Express or Implied)

b.    Termination for Convenience

9.              Limitation of Liability

a.    Enforceability

b.    Exceptions

10.           Waivers

a.    Waiver  of Consequential Damages

b.    Waiver of Subrogation

11.           Indemnification

12.           Insurance

a.    Commercial Liability

b.    Workers Compensation

c.     Auto Insurance

d.    Builders Risk

e.     Additional Insured

d.             Dispute Resolution

1.              Good Faith Negotiations

2.              Obligation to Proceed

3.              Mediation

a.              Non-Binding

b.              Binding

4.              Arbitration

5.              Litigation

6.              Obligation to Proceed

II.            Claims in Construction Disputes/Damages

a.             Breach of Contract

1.              Owner to Contractor

a.              Defective Work

                                                                            i.                   Standard

                                                                          ii.                   Measure of Damages

b.              Failure to Complete On Time

                                                                            i.                   Determination of Delay

1.              Construction Scheduling

2.              Float

3.              Concurrent Delay

                                                                          ii.                   Damages

c.               Failure to Pay Subcontractors

                                                                            i.                   Subcontractor Liens

                                                                          ii.                   Obligation to Obtain Discharge

                                                                        iii.                   Damages

2.              Contractor to Owner

a.              Failure to Pay

b.              Defective Plans and Specifications

                                                                            i.                   Spearin Doctrine

                                                                          ii.                   Examples

c.               Changed Conditions/Extra Work

d.              Delay

                                                                              i.                 Direct Damages

1.              Additional Costs

2.              Extended General Conditions

                                                                            ii.                 Unabsorbed Home Overhead

1.              Explanation

2.              Eichleay Formula

e.               Lost Productivity

                                                                              i.                 Direct Damages

                                                                            ii.                 Total Cost Approach

                                                                           iii.                 Modified Total Cost Approach

                                                                           iv.                 Measured Mile

                                                                             v.                 MCAA Factors

f.               Wrongful Termination

                                                                            i.                   Value of Completed Work

                                                                          ii.                   Lost Profits

b.             Quantum Meruit/Unjust Enrichment

c.             Breach of the Covenant of Good Faith and Fair Dealing

d.             Lien and Bond Claims

e.             Negligence; Contractor to Design Professional

1.              Claims

a.              Defective Plans and Specifications

b.              Unforeseen Conditions

2.              Effect

a.              Delay

b.              Lost Productivity

c.               Change Orders

3.              Defenses

a.              Standard of Care

b.              Economic Loss Doctrine

III.          Construction Liens and Bonds

a.             Overview

b.             Mechanic’s Liens (Private)

1.              Purpose

2.              Requirements

3.              Notice

4.              Filing 

5.              Service

6.              Enforcement

7.              Right to Attorneys’ Fees

c.             Public Improvement Liens

1.              Scope

2.              Requirements

3.              Notice

4.              Filing

5.              Service

6.              Enforcement

d.             Surety Bonds

1.              Overview

2.              Statutory/Private

3.              Payment Bond

a.              Notice

b.              Making Claim

c.               Obligations of the Surety

d.              Enforcement

4.              Performance Bond

a.              Notice

b.              Making Claim

c.               Obligations of the Surety

d.              Enforcement

5.              Lien Substitution Bond

a.              Purpose

b.              Process

c.               Effect

e.             Trust Funds

1.              Overview

a.    Nature & Purpose

2.              Applicability

a.    Real Property Improvements

b.    Home Improvements

c.     Public Improvements

d.    Subcontracts

e.     Rights of Action

3.              Formation

a.            Trustees

b.                   Beneficiaries            

4.              Record-Keeping

5.              Enforcement

IV.          Home Building and Remodeling Contracts

a.             Overview

b.             Contractual Requirements

c.             Other Requirements

1.                 General Business Law

2.                 Lien Law

D.       Enforcement

           1.        Violations

2.        Penalties

           E.       Local Laws