October 29, 2007

EDITOR'S NOTES

Over the past several months, we have covered multiple episodes of informational non-disclosure. In each case, the party that fails to share information crucial to the success or failure of the project ends up on the losing side of the lawsuit. This week’s first case illustrates that lesson yet again. A city initiated a sewer rehabilitation project but failed to alert the contractor that a lawsuit was pending over alleged contaminated soil. The contractor bid on the project, unaware of the litigation. It ultimately was required to truck in clean soil, which increased the cost of the project. The court allowed it to pass the increased cost to the city, despite the city’s argument of sovereign immunity and extra-contractual work.

Next, when a subcontractor fails to follow contract specifications and ignores requests to remedy the problem within the time allotted, the prime has the right to commence a contractual take-over to complete the project. Arguments of improper notice fail to convince the court that the sub planned to correct the problems.

And finally, we bring you another issue on the dealings between Fru-Con Construction Corp. and the Army Corps of Engineers on a dam rehabilitation project in Ohio. This latest legal episode covers profit mark-ups for deductive change orders.

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