Most construction contracts expressly require compliance with applicable building codes. But what happens when a contract is silent on code compliance? Wouldn’t one assume that good building practices and implied warranties would, in effect, read code compliance into the contract? A Tennessee court recently decided otherwise. Standard building practice in the area at the time did not include compliance with a particular code provision. And, there could be no implied warranty because there was an express warranty.

When are consultant fees a cost of change order administration and when do they become a cost of claim prosecution? In one recent case, a contractor recovered consultant fees incurred in negotiating an equipment change mandated by the government. These were direct costs of contract performance. Once the substitute equipment was approved, however, the continuing fees of the consultant could not be recovered. These efforts involved maximizing the contractor’s recovery. The fees were incurred in the prosecution of a claim.

Can an arbitration clause in a prime contract be incorporated into a subcontract by reference? Yes, but the incorporation must be clear and unequivocal. It was insufficient that a subcontract contained a broad “flow-down” clause, passing through to the subcontractor the obligations assumed by the prime. The arbitration clause in the prime contract was not attached to the subcontract and was not even available for examination at the time of subcontract signing.