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Volume 5 - Number 25 | June 18, 2007

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Recent Issues

  EDITOR'S NOTES | Issue 5-25
Technology abounds in the construction industry. A computer program or function exists for virtually every aspect of construction, from the earliest stages of planning and scheduling to the calendar programs that remind project owners to perform preventative maintenance checks on their completed facilities. When a contractor does not maintain records of a project, it may encounter additional problems proving claims when disputes arise. Such was the case for the contractor in this week’s first case. The contractor’s lack of records proving cost overages for a quantity under-run left it without recourse when it tried to pursue its claim.

Next, ambiguity begat confusion regarding a pay-when-paid clause when the prime contractor refused to pay its subcontractor because it had not yet received payment from the project owner.

In the final case, a court reversed the decision of an arbitrator who disregarded the contract when ruling that the parties were responsible for their own attorney fees. Under the terms of the contract, the prevailing party could seek compensation for its fees.
  ATTORNEY FEE PROVISION PREVAILED OVER ARBITRATION AWARD
An arbitrator does not have the authority to ignore the terms of a contract when determining responsibility for attorney fees on a dispute, says a state high court. If the contract is clear and unambiguous, the contract terms apply.
  CONTRACTOR FAILED TO DOCUMENT INCREASED COSTS CAUSED BY QUANTITY UNDER-RUN
Meticulous record-keeping would have saved a contractor from losing money caused by a quantity under-run. The protections afforded by the contract’s “Variation in Estimated Quantity” (VEQ) clause did not extend to the contractor because of lack of documentation.
  SUBCONTRACT “PAY-WHEN-PAID” CLAUSE RULED AMBIGUOUS
A subcontract’s ambiguous pay-when-paid clause takes center stage between a prime contractor and its sub when the project owner fails to pay the prime contractor for work performed.