Volume 7 - Number 34 | August 24, 2009
Recent Issues
EDITOR'S NOTES | Issue 7-34
Anticipatory repudiation of a construction contract occurs when a contractor indicates the intent to refuse future performance of the contract. Repudiation of a contract is a breach, justifying a termination for default by the project owner. One of the most common forms of repudiation is a threat to cease work unless the owner agrees to a modification of the contract.
In a case reported this week, a contractor and an owner had an intense disagreement regarding the appropriate method of bringing the project into compliance with performance standards in the contract. The contractor wrote that it had exhausted all means at its disposal and had ceased operations until further notice. The owner subsequently terminated the contract for default, justifying the default in part on the contractor's alleged repudiation of the contract. But, did the contractor's comments constitute repudiation?
Other cases reported this week involve the definition of a "responsive" proposal on a negotiated contract and the application of a reciprocal waiver to a separate prime contractor not party to the contract containing the waiver. A project owner's determination of a responsive proposal allows more discretion than the determination of a responsive sealed bid. And the waiver, by its express terms, applied to nonparties to the contract.
CONTRACTOR’S COMPLAINTS WERE NOT REPUDIATION OF CONTRACT
A contractor expressed frustration with a project owner’s directed method of repair. But, the contractor never refused to perform or threatened abandonment in the absence of a contract modification. The contractor did not repudiate the contract.
“RESPONSIVE” PROPOSAL NOT THE SAME AS A RESPONSIVE BID
Responsiveness of a contract proposal on a design-build project is not subject to the same scrutiny as that of a sealed bid. A court will only review the bid for abuse of discretion, not technical compliance.
RECIPROCAL WAIVER APPLIED TO SEPARATE PRIME CONTRACTOR
The reciprocal waiver of claims for insured property losses, contained in the standard AIA contract documents, protected a separate prime contractor that was not a party to the AIA agreement.
