Smith, Currie & Hancock's Common Sense Construction Law

A Practical Guide for the Construction Professional

John M. Mastin, Eric L. Nelson, Ronald G. Robey

• Publisher: Wiley
• Year: 2019
• ISBN:
  9781119540182
• Edition: 6
• Topic: Technik & Maschinenbau
• Subtopic: Bau- & Architekturtechnik

The #1 construction law guide for construction professionals

Updated and expanded to reflect the most recent changes in construction law, this practical guide teaches readersthe difficult theories, principles, and established rules that regulate the construction business. It addresses the practical steps required to avoid and mitigate risks—whether the project is performed domestically or internationally, or whether it uses a traditional design-bid-build delivery system or one of the many alternative project delivery systems.

Smith, Currie & Hancock's Common Sense Construction Law: A Practical Guide for the Construction Professional provides a comprehensive introduction to the important legal topics and questions affecting the construction industry today. This latest edition features: all-new coverage of Electronically Stored Information (ESI) and Integrated Project Delivery (IPD); extended information on the civil False Claims Act; and fully updated references to current AIA, ConsensusDocs, DBIA, and EJDC contract documents. Chapters coverthe legal context of construction; interpreting a contract; public-private partnerships (P3); design-build and EPC; and international construction contracts. Other topics include: management techniques to limit risks and avoid disputes; proving costs and damages, including for changes and claims for delay and disruption; construction insurance, including general liability, builders risk, professional liability, OCIP, CCIP, and OPPI; bankruptcy; federal government construction contracting; and more.

• Fully updated with comprehensive coverage of the significant legal topics and questions that affect the construction industry
• Discusses new project delivery methods including Public-Private Partnerships (P3) and Integrated Project Delivery (IPD)
• Presents new coverage of digital tools and processes including Electronically Stored Information (ESI)
• Provides extended and updated coverage of the civil False Claims Act as it relates to government construction contracting

Filled with checklists, sample forms, and summary "Points to Remember" for each chapter, Smith, Currie & Hancock's Common Sense Construction Law: A Practical Guide for the Construction Professional, Sixth Edition is the perfect resource for construction firm managers, contractors, subcontractors, architects and engineers. It will also greatly benefit students in construction management, civil engineering, and architecture.

1
THE LEGAL CONTEXT OF CONSTRUCTION

I. INTRODUCTION

Construction projects are complex and multifaceted. Likewise, the law governing construction is complex and multifaceted. Aside from questions of what one can do in construction, there looms also the issue of what one may do—that is to say, what the law of construction allows. So what is the law of construction? What factors influence the evolution of construction law?

For practical purposes, the law applicable to construction projects falls into three major categories: contract, tort, and statutory/regulatory. Contract law may seem intuitively logical, at least on the surface. Tort law may not seem logical in application, but it is an omnipresent influence on any construction project. Statutory or regulatory law generally applies to construction simply because some governing body has said it should, whether or not the application is logical. This book discusses in detail these legal bases of construction law. In this first chapter, each theory is introduced in concept.

II. CONTRACT LAW

A. What Is a Contract?

Contracts are the threads from which the fabric of commerce is woven. A contract may be as simple as an agreement to pay for food ordered in a restaurant, so complicated that no legion of lawyers could hope to decipher the real intent, or somewhere in between. Whatever their character, contracts govern the transactions that permeate our existence.

Contracts and contract law¹ dominate construction. What is a contract and what is contract law? A contract has traditionally been defined as “a promise or set of promises, for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.”² Thus, a contract is basically a set of promises made by one party to another party and vice versa. Consequently, the heart of a contract is found in both its promissory nature and its enforceability.³

Parties with the capacity to contract may generally agree to whatever they wish, as long as their agreements do not run afoul of some legal authority or public policy. Consequently, an owner and a contractor are free to agree to an allocation of risks in the context of a construction project,⁴ but they may not agree to gamble on the project's outcome. The former agreement reflects a policy of freedom of contract; the latter violates public-policy prohibitions on certain gambling transactions.

B. Breach of Contract

A breach of contract results when one party fails in some respect to do what it has agreed to do, without excuse or justification.⁵ For example, a contractor's failure to use the specified paint color,⁶ or its failure to complete the work on time,⁷ constitutes a breach of contract. An owner may likewise breach its contract obligations. Many contracts expressly provide, for example, that the owner will make periodic payments to the contractor as portions of the work are completed. If the owner unjustifiably fails to make these payments, this failure constitutes a breach. Similarly, an owner may be held in breach for failing to meet other nonfinancial contractual obligations, such as timely review and return of shop drawings and submittals. In short, a breach is any failure to live up to the promises in the contract.

Whenever there is a breach of contract, the injured party has a legal right to seek and recover damages. In addition, if there has been a serious and “material breach”⁸—that is, a breach that, in essence, destroys the basis of the parties' agreement—the injured party is justified in treating the contract as terminated.⁹

C. Implied Contract Obligations

Express contract obligations are those that are spelled out in the contract. Less obvious than the express duties under a contract, but just as important, are those obligations that are implied in every contract. Examples of these duties include the obligations of good faith and cooperation. (See Chapter 2.)

In the context of a construction project, one of the most important of these implied duties is each contracting party's obligation to cooperate with the other party's performance.¹⁰ The fact that this obligation is implied rather than expressed does not downplay its importance or the frequency with which it is the basis for breach of contract actions. Rather, the obligation to cooperate forms the very foundation of the agreement between the parties.

The implied obligations to coordinate and cooperate are reciprocal and apply equally to all contracting parties. By way of illustration, an owner is obligated to allow the contractor access to the site to perform its work; a prime contractor has a similar duty to not hinder or delay the work of its own subcontractors; and one prime contractor is obligated to not delay or disrupt the activities of other parallel prime contractors to the owner's detriment. Each example demonstrates that a contracting party is obligated to cooperate with the other party, whether owner-contractor or contractor-subcontractor. (See Chapters 2 and 10.)

In addition to the obligation of cooperation, the owner and the contractor have other implied obligations, such as warranty responsibilities. The owner's implied warranty of the adequacy of plans and specifications it furnishes is of great importance to the contractor, and the breach of this warranty forms the basis of a large portion of contractor claims. The existence of an implied warranty in connection with owner-furnished plans and specifications was recognized in United States v. Spearin.¹¹ The Spearin doctrine has become well-established in virtually every American jurisdiction that has considered the question of who must bear responsibility for the results of defective, inaccurate, or incomplete plans and specifications. In basic terms, the doctrine states that when an owner supplies the plans and specifications for a construction project, the contractor cannot be held liable for an unsatisfactory final result that is attributable solely to defects or inadequacies in those plans and specifications. The key in this situation is that the risk of the inadequacies of the design is allocated to the contracting party ...