Volume 8 - Number 10 | March 8, 2010 - Construction Claims Advisor

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You are here: Home » Volume 8 - Number 10 | March 8, 2010

Volume 8 - Number 10 | March 8, 2010

EDITOR'S NOTES | Issue 8-10: Most construction contracts address the issue of excusable weather delay. Typically, the contractor is allowed an extension of the performance period, but is not entitled to an increase in the contract price. The contract may expressly disclaim any recovery for delay, disruption or acceleration caused by natural occurrences.

As explained in a recent case, a Florida project was plagued by multiple hurricanes. In the aftermath of the storms, a shortage of labor and materials gave rise to escalated costs. The contractor sought reimbursement for the increased costs. The project owner responded that this was a fixed-price contract, which expressly disclaimed owner responsibility for increased costs caused by natural occurrences. The contractor said it was not seeking delay damages. The claim was for cost escalation, an item not expressly disclaimed under the contract. A federal appeals court was asked to sort out the dispute.

Other cases reported this week involved a contractor's commercial general liability insurance coverage and a project owner's right to sue its former architect for negligence. The contractor's award of a subcontract was not the type of "intentional act" that would exclude insurance coverage for property damage caused by the subcontractor. And the project owner, having allowed its rights under the architectural agreement to lapse, could not later sue the architect for professional negligence.

CONTRACTOR DENIED COMPENSATION FOR STORM IMPACT ON LABOR AND MATERIAL COSTS: A “Force Majeure” clause in fixed-price contracts prohibited a price increase due to natural occurrences. The disclaimer was not limited to delay damages but also applied to escalation in the cost of labor and materials.

SUBCONTRACTING DID NOT LEAD TO INSURANCE EXCLUSION: The awarding of subcontracts was not the type of intentional act that would exclude coverage under a contractor’s commercial general liability insurance policy.

OWNER’S REMEDY AGAINST ARCHITECT RESTRICTED TO CONTRACT TERMS: When a contract exists between a project owner and a design professional, the owner’s only remedies are under that contract. An owner could not sue its architect for purely economic losses allegedly caused by professional negligence.