Construction contracts sometimes require submission of a sample item for inspection and approval. The item is typically custom fabricated, as opposed to a standard off-the-shelf component. The purpose of the submittal process is for the contractor to establish compliance with the specifications before proceeding with the production of numerous items. But, can the contractor actually rely on approval of the sample item?

In a case reported this week, a government agency approved a sample and a subcontractor proceeded with production of the item. The production items contained a flaw, however. Upon re-examination, the same flaw was found in the sample item. Prior approval of the sample provided no cover for the subcontractor. Inspection had been for the sole benefit and protection of the government and as such, approval could not waive or alter the specifications.

Another case reported this week involves the right of arbitrators to ignore applicable state law. The arbitrators could not act in "manifest disregard" to New York's recognition of the "total cost" method for calculating delay damages. But, they were entitled to find that the evidence didn't support the claim. This week's issue also includes a "best practices" piece on holding subcontractors and suppliers to their price quotations.