Construction Law

An Introduction for Engineers, Architects, and Contractors

Gail Kelley

• Publisher: RSMeans
• Year: 2012
• ISBN:
  9781118360736
• Edition: 1
• Topic: Derecho
• Subtopic: Derecho urbanístico

A clear, concise introduction to construction law for professionals

Construction Law: An Introduction for Engineers, Architects, and Contractors offers a comprehensive review of the U.S. legal environment, focusing on the legal concepts and issues applicable to the design and construction industries. Topics covered include:

• Basic legal principles
• Project participants
• Project delivery systems
• Construction contracts
• The design process
• Procurement
• Pricing construction projects
• Subcontractors and suppliers
• Time for performance
• Construction scheduling
• Contract administration
• The payment process
• Changes to the work
• Differing site conditions
• Termination of the construction contract
• Mechanic's liens
• Construction insurance
• Surety bonds
• Liability for defective construction
• Calculations of damages
• The Economic Loss Doctrine
• Alternative dispute resolution

This book serves as an excellent introduction to construction law for students as well as professionals in the construction industry.

CHAPTER 1

LAW AND GOVERNMENT

1.1 INTRODUCTION

In simple terms, law is the rules that a government uses to protect the health and welfare of its citizens and those within its borders. The government of the United States is a federalist system, which means that lawmaking power is shared between the national (U.S.) government and the individual state governments.

Under the division of powers set out in the U.S. Constitution, the national government (also referred to as the federal government) is divided into three branches: legislative, executive, and judicial. The legislative branch (the U.S. Congress) is responsible for creating the laws, the executive branch (the president and federal agencies such as the Environmental Protection Agency) is responsible for implementing the laws, and the judicial branch (the federal court system) is responsible for interpreting the laws.

The powers of the state governments are divided similarly. The legislative branch is the state legislature; the executive branch includes the governor and state agencies such as the state department of motor vehicles; the judicial branch is the state court system.

1.1.1 The Powers of Governments

The powers of the federal government are limited to those expressly listed in the U. S. Constitution. Per the 10th Amendment to the Constitution, any power that is not specifically delegated to the federal government, or specifically prohibited to the states, is reserved to the states or to the people. The most significant power reserved to the states is the general police power to protect the health, safety, and welfare of their communities. The state’s police power is used as the basis for enacting laws in areas such as land use, gambling, crime, licensing, liquor sales, and motor vehicles. With respect to construction, police power gives state governments the right to adopt and enforce building codes and to require that architects and engineers working within the state be licensed by the state. Although police power does not specifically refer to the right to create a police force, it does include that right.

Any exercise of the police power is subject to constitutional and statutory restrictions, however. One such restriction comes from the U.S. Constitution’s prohibition that a government cannot “deprive any person of life, liberty, or property, without due process of law.” Another is the Constitution’s “Takings” Clause, which prohibits governments from taking private property for public use without the payment of just compensation. A third constitutional standard is equal protection, which prohibits governments from discriminatory actions. An exercise of the police power must also pass a test of reasonableness. Part of the test for reasonableness is whether there is some logical means-ends relationship, that is, whether the regulation bears some rational relationship to its stated objective.

1.1.2 City and County Governments

Cities and counties are political subdivisions of the state and must be delegated power by the state. Most states delegate considerable power, including police power, to the cities and counties. In many states, this is done through home rule. Home rule is a broad grant of power whereby cities and counties govern themselves by enacting and administering laws concerning local matters, within the bounds of the state and federal constitutions. Home rule can be granted either by the state’s constitution or by an act of the state legislature. In states without home rule, local governments only have the authority expressly granted to them by state legislatures.

1.1.3 The Powers of the Federal Government

Although the federal government does not have police power, it does have quite extensive powers, primarily because of the authority to regulate interstate commerce given to it by Article 1, Section 8, Clause 3 of the U.S. Constitution (the Commerce Clause). In addition, in areas that are not reserved to the states, conflicts between state and federal law are governed by the Supremacy Clause (Article 6 of the Constitution). Under the Supremacy Clause, the federal Constitution, federal laws, and international treaties supersede state and local law. State and local laws that contradict federal laws or treaties are preempted.

A federal statute may explicitly waive preemption of state law, however. In such cases the federal law is applicable in states that have not enacted their own laws. In addition, some federal laws, particularly those related to environmental regulation, only create minimum standards; the states are free to enact stricter regulations. In some cases, primary implementation of a federal regulation may be delegated to the states, provided the states meet certain standards. When a state is delegated federal authority for environmental regulation, for example, the Environmental Protection Agency (EPA) and the state sign a Memorandum of Agreement establishing their respective responsibilities and necessary procedures. Many federal statutes provide grants, technical assistance, and other support to help the states in furthering national policies or programs.

1.2 THE SOURCES AND HIERARCHY OF LAW

In the United States, law comes from five sources: constitutions, statutes and ordinances, regulations promulgated by administrative agencies, international treaties, and appellate court opinions.

1.2.1 The Constitution

As the supreme law of the land, the Constitution of the United States provides the basis for the U.S. government and guarantees the freedom and rights of all U.S. citizens. No laws may contradict any of the Constitution’s principles and no governmental authority in the United States is exempt from complying with the Constitution. The federal courts have the sole authority to interpret the Constitution and to evaluate the federal constitutionality of both federal and state laws. To the extent any statute or agency action is found to be unconstitutional, it is invalid. State constitutions are the supreme law within the state, subject to the U.S. Constitution. The statutes of a state must conform to that state’s constitution.

1.2.2 Statutes and Ordinances

Laws passed by Congress and state legislatures are typically referred to as statutes; laws passed by cities and counties are typically referred to as ordinances. City ordinances apply to people, property, and activities within the city’s corporate limits (the incorporated area). County ordinances (called resolutions in some states) are generally only applicable outside the corporate limits of cities. City and county ordinances are typically preempted by both state and federal law.

The U.S. Congress has exclusive authority to enact federal laws. A proposed law is referred to as a bill. Bills may originate in either the House of Representatives or the Senate, except that, per Article 1 of the Constitution, all bills for raising revenue must originate in the House of Representatives. A bill must be passed (approved) by both chambers before it is sent to the president. If the president vetoes a bill, Congress may override the veto by approving the bill again with at least a two-thirds majority vote in both the House and the Senate. The bill then becomes a law, despite the president’s veto. The process for enacting laws within the state legislatures is similar, and most governors have veto power over state legislation.

1.2.3 Agency Regulations

The executive branch of the U.S. government is charged with implementing the laws passed by Congress. The administrative bodies (agencies) in the executive branch issue regulations (rules) and make adjudications that apply the regulations. They also provide opinions and guidelines to follow. Federal regulations are issued under statutory authority granted to the agencies by Congress; state agencies issue regulations under authority granted to them by the state legislature. Regulations have the force of law, and federal regulations preempt state laws as well as state regulations.

In addition, the president has the power to issue executive orders. Executive orders are presidential directives governing actions by other federal officials and agencies. Executive orders do not have to be approved by Congress.

1.2.4 International Treaties

Article II, Section 2, Clause 2 of the U.S. Constitution grants the president power to enter into treaties with other countries, with the “advice and consent” of two-thirds of the Senate. Once signed, treaties become part of U.S. federal law. As a result, Congress can modify or repeal treaties by subsequent legislative action, even if this amounts to a violation of the treaty under international law. The changes will be enforced by U.S. courts despite the fact that the international community considers the United States to be bound by the original treaty obligations.

States are forbidden to make treaties with other countries. Furthermore, the Supreme Court has ruled that the power to make treaties is separate from the federal government’s other enumerated powers, and the federal government can use treaties to legislate in areas that would otherwise fall within the exclusive authority of the states.

1.2.5 Appellate Court Opinions

An appellate court is a court that hears appeals from lower-level courts. Usually, when an appellate court makes a decision, it not only decides who wins that specific case but also provides a written opinion that explains the basis for the decision as a guide to lower courts in handling future cases. When a case in a lower court is similar to a dispute that has already been resolved by a higher court in the jurisdiction, the court is bound to follow the reasoning used in the prior decision. Appellate court opinions are also referred to as common law, case law, or judicially-created law.

1.3 THE AMERICAN JUDICIAL SYSTEM

The role of the courts in America is to decide cases and controversies between adversarial parties. The American judicial system comprises two court systems—federal and state—that exist in parallel to one another. Although every state has its own court system, there are also federal courts in every state. However, federal courts have limited jurisdiction. Jurisdiction means the court has authority to hear a case and impose a remedy; the court must have jurisdiction over both the parties and the subject matter of the dispute in order to impose a remedy.

A case can only be brought in federal court if the dispute involves the U.S. Constitution or a federal statute, or is between citizens of different states and involves an aggregate claim of more than $75,000. A suit involving citizens of different states is referred to as a diversity suit; the “citizens” can be legal entities such as partnerships and corporations as well as individuals. Some claims involving the Constitution or a federal statute can be brought in either state court or federal court; this is referred to as concurrent jurisdiction. However, certain matters such as bankruptcy, patents and copyrights, actions involving the United States, and violations of federal criminal statutes can only be brought in federal court.

Only federal courts have the power to interpret the U.S. Constitution, federal laws, and federal agency regulations. Federal courts also have the power to review federal agency actions and determine the constitutionality of both federal and state laws. State courts have the power to interpret the state constitution, state laws, and state agency regulations.

1.3.1 Structure of the Court Systems

Both the state and federal court systems are multi-tiered. Cases are initially brought in a trial court; the trial can be either a jury or a bench (nonjury) trial. In a bench trial, the presiding judge delivers the verdict; in a jury trial, the jury delivers the verdict. Either party can appeal any part of the verdict to a first-level appeals court. In the federal system and the majority of the states, the ruling in the first-level appeals court can be appealed to a second-level appeals court. Courts of appeals do not use juries or witnesses, and no new evidence is submitted; appellate courts base their decisions on a review of lower-court records.

1.3.2 Federal Trial and Appeals Courts

In the federal system, most of the trial courts are district courts. Each state has at least one federal district case; more populous states can have three or four. In addition to the district courts, there is the Court of Federal Claims, a trial court that hears claims against the U.S. government. The district courts have concurrent jurisdiction with the Court of Federal Claims for claims under $10,000. When the claim involves a contract with a government agency, the Court of Federal Claims has concurrent jurisdiction with the applicable Board of Contract Appeals. Federal district courts are bound by legal precedents established by the decisions of the Supreme Court and the court of appeals for their respective circuit.

There are 13 federal courts of appeals. The U.S. Court of Appeals for the Federal Circuit hears appeals of decisions in cases involving patents, contract claims against the federal government, federal employment claims, and international trade. The Court of Appeals for the District of Columbia hears appeals from the DC District Court; the other 11 courts are circuit courts and hear appeals from the district courts in several states, called a circuit. For example, the Court of Appeals for the Eleventh Circuit hears appeals from the district courts in Florida, Alabama, and Georgia.

Although decisions from the federal courts of appeals can be appealed to the Supreme Court, the Supreme Court is not required to hear the appeal. In general, the Supreme Court will not accept a petition to review a lower-court ruling unless the case presents an important legal issue or there is a conflict in the rulings of the circuit courts with respect to the issue. In certain circumstances, the ruling of a state supreme court can be appealed to the U.S. Supreme Court; this usually occurs when the case involves a constitutional right that has been denied in the state courts.

1.3.3 State Trial and Appeals Courts

Although the states vary in the way they have structured their court systems, many states have a court of general jurisdiction that hears all types of cases. The court of general jurisdiction may also review challenges to rulings by administrative agencies such as those involving zoning and licensing. Some states have courts with specialized jurisdictions—for example, family courts that have jurisdiction over divorce and child custody disputes. In addition to these specialized trial courts, there may be less formal trial courts, such as magistrate courts, municipal courts, and justice of the peace courts that handle minor cases such as traffic offenses. Generally, the rulings in these courts can be appealed to a court of general jurisdiction.

Although some states have only one appeals court, most states have both an intermediate (first-level) appeals court and a second-level appeals court. In most states the second-level appeals court is called the supreme court of that state. While there is always the right of an appeal from a trial court decision, the state supreme courts are generally not required to hear an appeal of an intermediate appeals court decision.

1.4 COMMON LAW

There are two basic types of legal systems in the United States: common law and civil law. Louisiana has a civil law system that is derived from the French civil law system. Every other state has a common-law system; the federal legal system is also a common-law system. Common-law courts give great weight to previou...