Volume 7 - Number 9 | March 2, 2009
Recent Issues
EDITOR'S NOTES | Issue 7-9
The construction law industry has been largely built on the intricacies and convoluted nature of construction contracts. In many cases we have covered in
Construction Claims Advisor
over the years, the question in its simplest form is whether the contract legally binds the parties to the dispute in question. Sometimes the answer appears black and white, such as in this week’s first case. The owner pursued a claim for consequential damages even though the contract expressly forbade it. The court determined that the owner could not recover those projected losses.
More often, a contract dispute is not as simple.instance, in the second case, an excavation subcontractor used the subcontract to argue that the contractor, not the excavator, was liable for safe digging violations. Unlike the first case, however, the subcontract did not dictate the outcome. State statutory obligations prevailed and the subcontract was rejected.
The third case tackles a different matter altogether – it presents a Catch-22 for a takeover surety and a state agency. When the defaulted contractor on a transportation project owes federal taxes and its takeover surety forbids the agency from making payments of any kind on the contractor’s behalf, who prevails? In this case, a federal law dictates that the agency is obligated to pay the levied taxes before it can pay the takeover surety.
AIA CONTRACT DOCUMENTS LIMITED OWNER’S DAMAGES FOR DEFAULT
Contract documents disallow an owner’s claims for consequential damages on a project that never made it past the signing of the contract.
EXCAVATOR COULD NOT RELY ON PRIME CONTRACTOR FOR SAFE DIGGING COMPLIANCE
An excavator cannot use a contract to delegate compliance of statutory excavation requirements to a prime contractor. The party that actually performs the excavation must comply with the statute, regardless of contract verbiage.
STATE NOT LIABLE TO TAKEOVER SURETY FOR SURRENDERING CONTRACT FUNDS TO IRS
A takeover surety goes after a state transportation department for releasing funds to the IRS on behalf of the defaulted contractor. A federal law protects the agency from the Catch-22 of paying the IRS or the tax payer/third party.
