Volume 6 - Number 22 | June 2, 2008 - Construction Claims Advisor

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You are here: Home » Volume 6 - Number 22 | June 2, 2008

Volume 6 - Number 22 | June 2, 2008

EDITOR'S NOTES | Issue 6-22: Only a century ago, bartering and trading were common forms of payment for goods and services. While the barter system may still exist today to some degree, the almighty dollar, however weak it may currently be, is the more accepted form of exchange. In this week’s first case summary, the low bidder on a transportation project offered up coal as the asset behind its surety bid bond. Although the FAR (Federal Acquisition Regulation) makes allowances for non-monetary assets to be used in a bid guarantee or bid bond, it must be tangibly placed in an escrow account. The GAO determined that the coal could not be appropriately housed to meet the escrow requirement, and therefore concluded that the bid was nonresponsive.

Also this week, a state agency should have checked the National Electric Code when its contractor said the project’s specifications violated the code. Instead, the agency wrongly terminated the contractor for default. And, homeowners received a $300,000 jury award because of water leaks in their home that led to a dispute over ambiguous contract terms.

BID GUARANTEE ASSETS MUST BE CAPABLE OF ESCROW: Personal property may be used for a bid guarantee on a federal project, but it must meet certain criteria, including the ability to be placed in escrow.

WRONGFUL TERMINATION RESULTED FROM SPECIFIED CODE VIOLATION: An electrical contractor ceases work after the 1 owner instructs it to adhere to contract specifications that violate the National Electric Code.

“AS IS” CLAUSE RULED AMBIGUOUS AND ILLUSORY: Inconsistencies in a home construction project’s “as is” contract clause render the clause ambiguous, netting a $300,000 jury award to the disgruntled homeowner for faulty construction.