Construction contracts are replete with requirements that the contractor give the project owner or owner's representative notification of specified conditions or occurrences. The purpose is to enable the owner to evaluate and exercise its available options in light of evolving circumstances. In many cases, timely notice by the contractor is a prerequisite to any adjustment of the contract price or schedule. Owners routinely raise lack of timely notice as a defense to contractor claims. As two recent cases illustrate, however, this defense is not necessarily successful.

In one case, a contractor encountered subsurface conditions that differed materially from the representations in the soil reports. This precipitated a flurry of
e-mail correspondence among the contractor, project owner and the owner's consulting engineer. The owner later said the contractor failed to give formal notice of a differing site condition within 10 days of discovery, as required under the contract. A Georgia court ruled that the contract did not call for notification in a particular form. The e-mail correspondence provided sufficient timely notice.

In the second case, a developer argued that a contractor's mechanic's lien was invalid because the contractor did not serve the developer, the record owner of the property, with a notice required by the lien statute. A Missouri court concluded that the developer and the constructor, with whom the contractor had an agreement, were one and the same. The two companies were owned and controlled by the same individual, who commingled their operations and finances. The contractor had an agreement directly with the owner/developer, was not a subcontractor, and was not required to give statutory notice. The individual who controlled the two companies had been well aware of the contract at all times.

The third case this week involves recovery of delay damages. The Connecticut Supreme Court ruled that when a contract authorized recovery of damages for one type of delay event, but otherwise allowed only an extension of time, the contractor could not recover for delay events other than the type stipulated.