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Volume 5 - Number 32 | August 13, 2007

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Recent Issues

  EDITOR'S NOTES | Issue 5-32
With the recent surge of attention given to environmental issues and the theory of global warming, thinking “green” has become an everyday attitude for many consumers. From simple recycling efforts to investments in Energy Star appliances to environmentally friendly homes, conservation efforts are gaining momentum. While green construction has long been acknowledged in the commercial sector, it is still relatively new in the residential market. This week’s first case centers on a couple that wanted to use environmentally friendly materials to build a berm house (an earth-sheltered home). Problems arose when the contractor’s work came into question. The couple filed suit against the contractor and the manufacturer that had recommended the contractor, alleging that there existed an agency relationship between the two entities. In a narrow decision, the state appeals court ruled that a relationship did not exist.

This week’s three other cases cover an array of issues. Did a contractor meet the legal requirements necessary to recover lost profits on prospective projects after it was wrongly terminated on an existing project? A California court said no. Also, a federal circuit court of appeals ruled that a government agency should not have withheld payments from an escrow account as part of a set-off against the contractor. And finally, a state supreme court rules that a contractor was not liable for the defects in a concrete pour job—it was merely following the flawed directives of the owner after noting its objection to the instructions.
  SUBCONTRACTOR PROTECTED AGAINST GOVERNMENT SET-OFF
When a government agency deposits prime contract payments into an escrow account for the benefit of a subcontractor, it cannot take a set-off against the prime contractor for unrelated debts.
  PROJECT OWNER RESPONSIBLE FOR DIRECTING DEFECTIVE WORK
Owner-directed work leaves a contractor with little choice but to follow directives, despite misgivings that the work will be substandard. In the end, the contractor is not liable for that defective work.
  FAILURE TO ESTABLISH AGENCY RELATIONSHIP BARS CLAIMS AGAINST MANUFACTURER
Meghann McConnell By Meghann McConnell
Homeowners fail to establish an agency relationship between their contractor and the manufacturer who recommended the contractor when the construction project goes awry.
 
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