Construction Law in a Nutshell
Author:
Campbell, Donald E.
Edition:
2nd
Copyright Date:
2019
16 chapters
have results for construction
Chapter 2 The Role of the Owner 30 results (showing 5 best matches)
- A construction management delivery system is an umbrella term for a variety of delivery systems. While the term construction manager does not have a universally accepted meaning, generally construction management delivery systems can be divided into two distinct categories based on the responsibilities assumed by the construction manager. The first is the
- The primary difference between the at-risk and agency construction manager is the shift in risk from the owner to the construction manager. The construction manager is responsible for unjustified delays and defective construction. The construction manager also assumes responsibility for claims from subcontractors—providing a layer of protection for the owner which is not present in an agency construction manager approach.
- As first conceptualized, the construction management approach contemplated that an owner would retain a construction manager for a fixed amount to serve as the owner’s agent from the design stage through the end of construction. This is known as
- During the preconstruction stage, the agency construction manager provides the owner with advice on designing with an eye toward construction. This may mean catching discrepancies in the plans or specifications that could arise in the construction process (and lead to disputes or change orders) and providing value engineering. During the construction phase, the construction manager assists the owner with selection of subcontractors and coordinates the trades.
- Owners, concerned about the risk of liability with Agency Construction Managers, began to consider an alternative delivery system:
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Chapter 1 Introduction to Construction Law 33 results (showing 5 best matches)
- Construction law implicates several sources of law. For example contracts, statutes and municipal codes, tort law, and constitutional law all regulate different aspects of the construction process. With all of the rules and regulations implicated in even the simplest construction project, it is not surprising that a number of states have certifications available for lawyers who specialize in construction law practice.
- In sum, it is incorrect to think of construction law merely as advanced contracts. As one court noted, construction disputes “are a separate breed of animal.” A construction project is impacted by and can spawn a dispute surrounding numerous areas of law.
- The fundamental area of law implicated in the construction context is contract law. The rights and obligations of those involved in a construction project are primarily governed by the terms of their contracts. The are in essence a form of private law to which the parties agree to be bound. In addition to the express terms of the contract, courts have also implied into construction contracts certain terms—that will be enforced even if the parties do not put them in the contract. These terms are called and are usually based on the idea that, as a matter of justification, parties should not be able to avoid certain obligations. For example, courts will imply into a construction contract an obligation of the contractor to perform its work in a workmanlike manner.
- The general rules of contract formation and interpretation apply to construction contracts. These rules are not unique to the construction process but
- The remainder of this book will discuss the major players in a construction project and the legal issues that can arise with each. This will include the owner, design professional, contractor, and subcontractor, and surety. These of course are not all of those that influence a construction project. Other players include lenders, insurance companies, and governments at all levels. These players are discussed as they impact the major participants in the project. It should also be noted that these are “minor” players only in how the discussion is organized. An owner that is dependent on financing from a lender to begin construction certainly does not consider the lender a minor participant.
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Chapter 5 The Role of the Subcontractor 17 results (showing 5 best matches)
- For example, Connecticut’s statute invalidates both choice of law and forum selection clauses: “Any provision in a construction contract for the performance of work on a construction site located in this state that purports to require that any dispute arising under the construction contract be mediated, arbitrated or otherwise adjudicated in or under the laws of a state other than Connecticut shall be void and of no effect, regardless of whether the construction contract was executed in this state.” Conn. Gen. Stat. Ann. § 42–158m.
- The justifications for terminating a subcontract are often set out in the contract itself. If the parties have not agreed contractually to the justifications for termination, the common law requirement of a material breach or a defense to performance must exist. Because of the interrelated nature of the construction contracts and the dependence of the various parties to the project, it behooves all parties to set out the bases and consequences of termination. To demonstrate how the interrelated nature of the parties can justify unique contract provisions, consider the situation where the contract between the owner and contractor is terminated, but the owner wishes to continue construction with the subcontractors doing work on the project. Of course the owner has no contractual relationship with the subcontractors. To address this issue, standard contracts provide that if the owner terminates the contractor, the owner has the right to an
- The owner on a construction contract has certain fundamental objectives—such as having the project completed consistent with the construction documents on time and within budget. Of equal concern is ensuring that everyone performing work on the project is paid for work performed so that the property is not burdened with liens. The problem for the owner is that she does not have a contract with those supplying labor or supplies on the project, and must rely on the contractor to distribute payments consistent with the work performed. One way that owners seek to address this problem is by requiring
- L&B Construction v. Ragan Enterprises, 482 S.E.2d 279 (Ga. 1997)
- Bruner & O’Connor Construction Law § 9:74.
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Chapter 4 The Role of the Design Professional 34 results (showing 5 best matches)
- The design documents that are designated as part of the construction contract include the drawings, specifications, and any amendments to the drawings/specifications that occur in the course of construction. The
- In addition to these third-party programs, federal, state and local governments have also enacted laws and ordinances either mandating or incentivizing environmentally friendly construction. The
- When the design is completed, the role of the design professional in the construction phase of the project depends on the needs of the owner. The AIA documents contemplate that the design professional will remain the owner’s agent throughout the construction process. Practically this makes sense because the design documents inevitably will change/need clarification when the construction phase begins. Having the designer present to interpret the project documents is an efficient way to handle disputes. However, if the owner’s needs are merely design related, the parties can agree that the design professional’s services will be limited to producing design documents.
- The construction documents, along with the bidding documents, make up the for a construction project.
- While the administrative responsibilities a design professional may assume during construction are discussed in detail later, it is important to note that the relationship between the design professional and the owner shifts from the design phase to the construction services phase. While preparing design documents the design professional maintains her professional independence from the owner, and acts as an independent contractor. However, during the construction phase, the designer acts as the agent of her principal the owner. That shift in relationship means that the design professional assumes certain
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Chapter 6 The Role of Insurance and Surety Bonds 17 results (showing 5 best matches)
- To avoid the situation where insurers are asserting claims against members of the construction team, standardized construction contracts require that those on the construction site agree to a That means that the insurance company will pay a covered loss, but will not be entitled to recover the amounts paid from the party causing the harm when they are also a member of the construction team. Of course, what the parties agree to in the construction contract does not mean that’s what the insurance policy will say. The insured has an obligation to make sure that the insurance company also agrees to waive its subrogation rights in the insurance policy.
- A surety relationship is not unique to the construction industry. In fact there is an entire Restatement on Suretyship and Guaranty. Suretyship simply represents a situation in which one person agrees to perform or to pay a debt owed by another if they fail to perform. This relationship could arise in any area of life. In the construction context, sureties are companies that issue agreeing if the contractor defaults in performance or payment under the construction documents, the surety will step in and either make payments due to those providing work on the project or complete the project. The goal of this chapter is to identify the parties in the surety context and examine the rights and responsibilities of the parties.
- and each of the parties have some rights/obligations to the other parties. The surety and the contractor will enter into a contract, known as a surety bond, in which the surety promises the obligee (owner) that the surety will step in if the principal (contractor) fails to perform its obligations under the construction documents. Thus, the involvement of the surety on a construction contract is for the benefit and protection of the owner. The surety is only obligated to expend funds to the extent set out in the bond document. of the bond. There are four primary types of surety bonds issued in the construction context: bid bond, payment bond, performance bond, and lien bond. Federal law, under the –3134, requires both performance and payment bonds on federal construction projects. A number of states follow the lead of the federal government, and require payment and performance bonds on state construction projects. These state laws are known as
- It is the exact same scenario in the construction context. A party will seek an insurance policy to shift the risk of loss from the insured to the insurance company. There are two types of insurance coverage:
- Insurance Policies Required on a Construction Project
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Chapter 8 Defective Construction 15 results (showing 5 best matches)
- The owner may believe that the design professional has a contractual obligation to spot and stop defective construction, and that the failure to do so constitutes a breach of contract. Design professionals, on the other hand, want to make it clear that their obligation in the administration of the project is not to direct how the project is constructed (what the AIA standard contract describes as the “means, methods, techniques, sequences and procedures” of construction), but simply to observe the construction when the architect visits the site and ensure that construction is proceeding consistent with contract documents. Certainly the parties can agree that the design professional will do more—even up to assuming responsibility to be on site full-time observing and inspecting the work. A design professional involved in the day to day construction process is often called a ..., does not allow the architect to close his eyes on the construction site, refrain from engaging in...
- Construction is if it either does not conform to contractual requirements or is performed in a manner that falls below the standard of care that is owed. The types of defects are as diverse as the types of construction projects. Work may be performed in an improper manner, the work may have been performed properly but the wrong material used, or the project design may be inadequate.
- This chapter addresses the most common types of claims for defective construction that arise in tort and contract. However, it is important to note that there may be other claims available for defective construction that vary by jurisdiction. For example, some claims have been successful under an statute. Often broadly worded to provide protection to consumers, they can encompass construction. Courts typically require evidence of wrongful/deceptive conduct beyond mere defective work to allow these claims. However, if a successful claim can be asserted, the statute may provide for recovery of attorney’s fees and possibly some form of penalty/punitive damages for the conduct which would not be available in a breach of contract claim. For example, a Texas court found a violation of their Deceptive Trade Practices Act where the builder made numerous false representations to the owner including statements about the cost of construction and the time for completion.
- One difficulty that arises in discussing construction “defects” is that the concept is so broad and implicates so many different claimants and claims that it is impossible to capture every possible claim or claimant. The purpose of this chapter is to summarize generally two categories of defects—those that arise because a party breached a contractual obligation and those that arise because a party breached a duty owed to another (negligence). However, it is important to remember as you read this chapter that construction defect disputes are rarely a two party (i.e. owner v. contractor) affair. Here is how one court describes defect cases:
- Defining Construction Defect
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Chapter 10 Damages and Dispute Resolution 20 results (showing 5 best matches)
- is a longstanding and well-accepted method of resolving construction disputes. Three primary justifications have been put forth for preferring arbitration over litigation in construction disputes. First, participants in a construction project need quick resolution and finality in decisions. Allowing claims to linger or face multiple appeals/remands that could happen in litigation keeps a completed project open and lingering when the parties would prefer to close the books on the project and move on. Second, the cost of arbitration is perceived to be less than the cost of litigation. Third, because construction claims are complex, utilizing arbitrators familiar with the construction process and construction contracts is better for the parties than relying on a lay jury or generalist judge to decide disputes. Of course these are broad generalizations and all of these justifications do not exist on every project.
- Keep in mind as you contemplate calculation of damages in the construction context that construction—no matter how complex—will ordinarily operate through the familiar lens of contract law. Therefore, just as in any other contractual relationship, when a party breaches a construction contract, the goal is to give the nonbreaching party the
- The construction project without some dispute is like a four-leaf clover—often hoped for but rarely seen. Therefore, standard construction contracts set out a mechanism for resolving disputes. The resolution process is actually a two stage process. First is the recognition of a dispute and second, following the informal dispute resolution process provided for in the contract. If the informal process is unsuccessful, resolving disputes either through arbitration or litigation.
- In many situations, however, it can be very difficult for the contractor to establish the precise amount of damages caused by the loss of productivity throughout the course of a construction project. Over time methods have been established for the
- Bruner & O’Connor on Construction Law § 19:37.
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Chapter 7 Common Contractual Provisions 13 results (showing 5 best matches)
- The subsurface condition at the project site can be unknown until construction has commenced and the conditions are exposed. The fact that the subsurface condition cannot be established with certainty until after construction has commenced puts both the contractor and the owner in an unenviable position. Therefore, construction contracts often contain a provision setting out an agreed process for addressing conditions discovered on the site that were not anticipated by the parties.
- Common insurance policies required on a construction project include: . The purpose of the CGL policy is to allocate risks with regard to personal injury and property damage to property other than the project itself (which is likely excluded by the “your work” exclusion). Builder’s risk policies are obtained during the course of construction, and cover certain damage to the property while construction is on-going—such as damage caused by fire, wind or vandalism. Workers’ compensation insurance is provided to cover injuries to employees that occur in the course and scope of employment. The design professional may be required to maintain professional liability insurance to cover claims of negligence in the provision of architectural services.
- . An insurance company is only responsible for paying covered losses on behalf of named insureds. Therefore, on a construction project if the contractor is the only insured on a policy, the owner has no right to make a claim for losses that would otherwise be covered (the same is true if the subcontractor’s policy with regard to the contractor). To ensure that the owner is also covered, construction contracts require the owner and owner’s representative (under the AIA documents the architect) is listed as an additional insured under the policy.
- There are several contractual provisions that are common in construction contracts. These clauses are ubiquitous enough to justify a separate chapter. The provisions addressed include: (a) differing site conditions provision; (b) indemnity provision; (c) change in work provisions; (d) liquidated damages provisions; and (e) insurance provisions.
- clauses are common in construction contracts to address issues of delay. These clauses provide a set amount of damages that will be suffered if the project is delayed beyond the established completion date. In the construction context, the liquidated damages are usually assessed on a per day basis. So, for example, if the contract provides for $500 per day in liquidated damages, and the contractor is 2 days late in completing the project, then the owner can charge $1,000 against the balance due to the contractor. The parties can agree when the liquidated damages stop. Ordinarily liquidated delay damages cease once the project is substantially complete. The EJCDC contracts, however, provides a two tiered approach—with one amount of liquidated damages before substantial completion and a second, lower amount for delay in obtaining final completion.
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Preface 5 results
- Construction law has been around since a caveman put one rock on top of another for shelter and the structure collapsed maiming a neighbor. Then, the dispute was surely resolved in favor of the stronger of the two combatants (under the venerable legal doctrine of “might makes right”). Later (around 1780 B.C.), King Hammurabi codified the sentiment: “If a builder build a house for some one, and does not construct it properly, and the house that he built fall in and kill its owner, then that builder shall be put to death.” Luckily for builders, today this dispute would be resolved through the combat of lawyers. Despite these ancient origins, and construction law’s development into a unique and respected area of the law today, law schools have been late to consider construction law on its own terms. Ironically, this is not true for other professional schools—such as architecture and construction management—which have made construction law a core part of the curriculum. This is all...
- The approach is to take each of the primary participants in a construction project and examine the legal doctrines applicable to that participant. The players analyzed are the owner, contractor, design professional, subcontractor/supplier, and surety/insurance company. In addition, there are also chapters discussing common contractual provisions, defective construction, the economic loss rule, and damages. This structure is intentional and hopefully provides a way to organize a syllabus or course of study that is not only chronological but also intuitive.
- The goal of this book is to provide the reader a foundational understanding of the players and legal disputes that can arise in a construction project. Of course the more complex the project the more complex the problems, but even in the simplest project disputes arise, and the parties need to know their legal rights and obligations. This book seeks to provide an overview of those rights and obligations.
- This book has been a labor of love. I enjoy reading, writing, and teaching about construction law. However, there is no such thing as a perfect manuscript or approach, and I certainly do not claim perfection here. Decisions had to be made about what to put in and what to leave out (it is a nutshell after all) and where to put concepts that could cross-cut chapters. I encourage the reader to provide feedback and comments that will serve to improve future editions of the book.
- In closing, I would like to provide a thank-you to several folks. First to my research assistants that helped me gather cases and materials as I wrote, and particular Mr. Russell Dumas who provided the final push needed to get the book finalized. I would also like to thank two folks with West Academic—Ms. Elaine Thompson who first planted the seed for this project and Mac Soto who gently but firmly pushed me toward completion of the book. A continuing thanks to the administration at MC Law, particularly Dean Patricia Bennett and Dean Emeritus Jim Rosenblatt, who are a constant source of support and encouragement. Finally, but certainly not least, I thank those who have taken my construction law class. Without them, this book would not exist.
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Chapter 3 The Role of the Contractor 26 results (showing 5 best matches)
- Contractors seeking to bid on a project or enter into a construction contract, must be aware of the licensing requirements of the state where the construction will take place. Each state—and some local governments—have unique laws and regulations on what is required prior to entering into a construction contract. For example, Alabama requires out-of-state contractors to register with the Department of Revenue, provide a bond based on the amount of the contract, and provide a listing to the
- Construction and Time
- Time is of the essence in the construction industry. Time is money and a delayed project can result in the owner losing a great deal of revenue or at the very least the ability to use the project as anticipated and a contractor being forced to forego another project or incur increased labor or material costs. While historically construction contracts (as well as other contracts involving real estate) were viewed as subject to too much uncertain to bind a party to performance by a certain date, with modern technology and scheduling software, this has changed and is reflected in the fact that standard contracts now explicitly include a
- Even the best laid schedule can run into unforeseen events. When this happens, the project completion date may be pushed beyond what was agreed to in the contract. Identifying responsibility for the delay is crucial on a construction project. A contractor will be entitled to additional compensation or more time to complete the project if the delays are attributable to the owner or design professional. On the other hand, if the contractor (or subcontractors) are responsible for the delay, for example when the contractor fails to adequately schedule, sequence or coordinate construction, the owner may be entitled to charge the contractor liquidated damages or seek
- demand by the owner that the contractor accelerate the speed of construction and finish prior to the agreed-to date of completion in the contract. Second is commonly known as where the owner refuses to grant the contractor additional time to complete the project despite excusable/compensable delays, requiring the contractor to increase the pace of construction to make up for previous delays on the project and meet the contractual completion date. Acceleration of work increases the cost to the contractor—including the cost of additional manpower, payment of overtime, and rental of additional equipment. In both of these situations, if the contractor can establish its right to additional time/compensation under the contract—that is, demand and denial for additional time, the presence of a compensable/excusable delay, and evidence that the delay would ultimately impact the completion date—the contractor can recover its costs.
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Outline 12 results (showing 5 best matches)
Chapter 9 Economic Loss Rule 5 results
- ...losses suffered as the result of the defective or insufficient performance of someone else, such as the cost to repair/replace or reduction in value due to defective work. To give a simple example, if an owner contracts with a contractor to construct a house and the contractor negligently installs the roof, the owner must sue the contractor for breach of an express or implied provision of the contract, and will be limited to the cost to repair the roof (breach of contract damages). If the owner asserted a “negligent construction” claim in tort instead of a breach of contract claim, the economic loss rule would require dismissal of that claim. Economic losses are distinct from personal injury harms or harms to property other than that which was subject to the contract. The economic loss doctrine does not bar claims for personal injury or for harm to other property. Therefore, in our prior example, if the owner was injured when a piece of roof fell on his head as a result of...
- Economic Loss Rule in Construction Context
- The economic loss rule is relevant to every relationship in the construction context because of the inter-related connections between those with and without contracts. To analyze whether the economic loss rule would bar recovery in a particular circumstance, the starting point is whether there is a contract between the parties. If the answer is yes, then the economic loss rule requires the claim for defective construction must be brought in contract (unless there are personal injuries or harm to other property). Therefore, an owner cannot sue a subcontractor for breach of contract for the subcontractor’s defective work on a project. Similarly, the subcontractor cannot sue the owner for damages incurred by the subcontractor as a result of owner-caused delays. From the tort perspective, the owner would not be able to sue the subcontractor in negligence if there was no personal injury or harm to property other than the contract. If the economic loss rule applied then the owner would be...
- Annotated Construction Law Glossary
- The actions (or inactions) of design professionals can have a significant impact not just on the owner, but on every participant in the construction process—particularly contractors and subcontractors. The general rule is that the contractor/subcontractors have no claim against design professionals because they have no contract and claims based on delay or inadequate plans and specifications would be purely economic losses.
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Center Title 1 result
Index 18 results (showing 5 best matches)
Title Page 1 result
- Publication Date: August 27th, 2019
- ISBN: 9781684670307
- Subject: Construction Law
- Series: Nutshells
- Type: Overviews
- Description: This book provides a comprehensive survey of the major legal issues that arise in the course of a construction project. The structure of the book first focuses on the major participants on a project and the relationships and interests of each of participant. It then shifts to chapters on recurring themes in construction law such as the economic loss rule, calculation of damages, and defective construction. While making the concepts accessible for any reader, the book provides a logical structure for those teaching construction law to use as either the primary or supplemental reading for the course. The second edition, in addition to adding new substantive material and case examples, is also updated to reference the 2017 revisions to the AIA construction documents.