Should You Guaranty Performance on a Green Project? (Law note)

guarantee sealBy now, I hope you know me well enough to know that I’d never, ever say you should make a guaranty of performance, period, let alone guaranty the green performance for a new building.  However, sometimes caution has to be thrown to the wind to get the job– at least in the case of a recent GSA design-build project in Seattle.

There, the design-build team agreed that the GSA could withhold 0.5% of the original contract amount, or $330,000, pending the achievement of energy goals.  As writer Suzanne H. Harness, J.D., AIA, noted recently

The GSA’s approach is diametrically opposed to the recommendations of the American Institute of Architects, which advises both architects and contractors not to guarantee or warrant the achievement of a sustainability goal.  The AIA’s 2011 Sustainability Guide explains the obvious:  contractors and architects can design and construct a building, but the owner operates it, and the owner’s actions are beyond the control of the design and construction team. If the owner operates the building differently from the assumptions used during design, performance goals will likely not be met, even if the building is perfectly constructed. [Emphasis added].

Ms. Harness also correctly noted that professional liability insurance would not cover such a guarantee of performance.  So beware to the design team who takes such a project on: they can be held contractually liable, but there will not be insurance to cushion the fall out from any lawsuit.

Just DON’T do it!

 

 

Understanding & Modifying Key Construction Contract Terms

As I mentioned, I  was one of three amigos who spoke on a Construction Contract webinar last week.  We had a good turn out and lots of very astute questions during the Q&A portion.  While you will miss all of my witty insightful helpful commentary, you can check out the slides for my portion, on understanding and modifying key terms, here:

Drafting Construction Contracts

My comrades’ presentations can be found by visiting Chris’s blog (for payment provision issues) and Craig’s blog (for damages and dispute resolution issues).  Happy viewing!

Standard of Care for Engineers- the Jury Instruction (law note)

Not perfection I’ve previously talked about the standard of care for design professionals on construction projects. 

As you should be aware, the standard is reasonableness, not perfection.  To illustrate the point, consider a standard North Carolina jury instruction on the standard of care for engineers:

 “Under our law, a professional engineer is required to exercise that degree of care which a professional engineer of ordinary skill and prudence would exercise under the same or similar circumstances, and if the engineer fails to exercise such degree of ordinary skill and prudence under the same or similar circumstances, the engineer’s conduct would be negligence.”

For an architect, just substitute the word “architect” for “engineer” in the jury instruction above.    Sometimes it can be challenging to meet a client’s expectations, and some clients believe that plans should (and can) be perfect.  In your discussions about the project with the client, be sure the client has reasonable expectations.  It is not reasonable to expect perfection in design plans.  Unforeseen conditions, changing criteria, and differing code inspector interpretations are all to be expected.  Educate your client about typical errors & omissions at the start of the construction project.
 
Do you have a question about the standard of care?  Drop me an email at mbrumback@rl-law.com.  Be sure to sign up for email delivery of blog posts directly to your inbox so you never miss a post!
 

Yes? Never? Maybe? Contract Clauses for Architects & Engineers (Tue Tip)

Make plans to attend a free webinar specifically for design professionals.  Entitled “The Bright Gray Line: “Yes”, “Never”, and “Maybe” Contract Clauses for Design Professionals (and how to find the difference)”.

The presentation will highlight challenging contract clauses and approachs to evaluating, negotiating, and managing those clauses.  Among the clauses which will be discussed are those relating to indemnity, the standard of care, code compliance, and document ownership.

The seminar is sponsored by Hall & Company and  presented by attorney David Ericksen, President of Severson & Werson.

When:                  Tuesday, June 14, 2011

Time:                   1:00 pm EDT

How:                    Click here to register

If you attend the webinar, let you know your thoughts afterwords.  I’m planning to attend as well, so we can compare notes.

Design Error and the Spearin Doctrine (Law note)

engineering plansDesign Error.  Two words that strike fear into the heart of any architect, engineer, or lawyer representing them.  Today’s post discussion is to discuss the different obligations of each of the parties on a construction project relating to design errors.

As discussed last week, designers have an obligation to design in accordance with a reasonable standard of care.  That does not mean that the plans and specifications are perfect, however.

While the contractor is not responsible for design errors, he does have a duty to report any design errors or omissions which he discovers during his review of the plans.  If he discovers any design errors, he must report them to the owner.  See, for example, AIA A201 3-2.2.

As we have also discussed, an owner also impliedly warrants the adequacy of the plans and specifications .  This is sometimes known as the “Spearin Doctrine,” after the seminal Supreme Court  case, US. v. Spearin, 248 U.S. 132 (1918).   In Spearin, a contractor sought to recover from the government for the government’s failure to provide accurate plans reflecting the overflow issues which preexisted at the Brooklyn Navy Yard,   The Court held:

[I]f the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be
responsible for the consequences of defects in the plans and specifications, (Citations omitted). This responsibility of the owner is
not overcome by the usual clauses requiring builders to visit the site, to check the plans, and to inform themselves of the requirements of the
work. The duty to check plans did not impose the obligation to pass upon their adequacy to accomplish the purpose in view.

Id. at 136-137. The Spearin Doctrine has been faithfully followed in the North Carolina courts. See, e.g., City of Charlotte v. Skidmore, Owings and Merrill, 103 N.C, App. 667, 407 S.E.2d 571 (1991); Burke Co Public School Bd of Education v Juno Construction Corp, 50 N.C App. 238, 273 S.E,2d 504 (1981).

One state court held, “[i]t is simply unfair to bar recovery to contractors who are mislead by inaccurate plans and submit bids lower than they might otherwise have submitted.” Battle Ridge Companies v. North Carolina Dept. of Transportation, 161 N.C. App. 156, 160, 587 S.E.2d 426 (2003), quoting Lowder v. Highway Comm., 26 N.C, App, 622, 638, 217 S.E.2d 682, 692, cert denied, 288 N.C. 393, 218 S.E.2d 467 (1975).

Obviously, the architect or engineer is the ultimate party responsible for design errors, but all parties play a role in identifying and minimizing the effect of such errors through prompt notification.

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