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Volume 6 - Number 04 | January 28, 2008
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EDITOR'S NOTES
English author Douglas Adams said, “I love deadlines. I like the whooshing sound they make as they fly by.” The novelist, best known for The Hitchhiker’s Guide to the Galaxy, had a habitual problem with deadlines and was once confined to a hotel suite for three weeks to ensure that he met his editor’s deadline. Although those measures may seem a little harsh, contract deadlines are not something to take lightly. If a contract demands a 45-day deadline, the parties would do well to adhere to that deadline unless both sides agree to a different arrangement. When it comes to filing and responding to claims, the deadlines are usually immovable. Miss the deadline and you stand a good chance of forfeiting your claim. Such was the case with the surety that missed its response deadline on a payment bond issue by three days.
Unlike deadlines, which have hard and fast rules, many other aspects of business are not so rigid. For example, when a contract is terminated for convenience, the contractor can add up the total of incurred costs, including unsubmitted claims, for compensation. Also this week, general liability policies were not intended to cover a contractor’s defective work. However, they can cover defective work performed by a subcontractor. And finally, prevailing status does not necessarily go to the party that has the biggest cumulative award of all cases and claims related to a contract—it is decided on a case-by-case basis.
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CONVENIENCE TERMINATION COSTS INCLUDE UNSUBMITTED CLAIMS
A contractor may be entitled recover incurred costs on a contract terminated for convenience, including costs associated with unsubmitted claims, but it cannot recover anticipated profits if it is in a loss position at the time of the termination.
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