Category Archives: Law Notes

Betterment on the Construction Project (law note)

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betterToday’s post is thanks to a discussion with an engineer following a talk I gave for the ASCE of North Carolina.  He asked about owners trying to recover for obvious mistakes, for which they’d have to pay anyhow.

That brought me to the topic of betterment.  What is betterment, and why is it important in the construction world?

Betterment is a legal concept that says, even if your plan is missing something, if the owner would have had to pay for that missing item anyhow, they cannot get money from you.

A real life example:  A designer’s set of plans showed sanitary sewer extending out 8 feet from the building footprint.  It did not show the sewer connecting to the city sewer line.  The owner later complained because it had to pay the contractor for a change order for the connection.  However, since the owner would have had to pay for the connection regardless, the owner could not recover from the designer for the missing sewer connection.  [Had the owner paid a premium due to the fact that the missing connection was discovered during construction, that premium over and above normal costs could have been recoverable.]

Betterment, then, is a defense to a claim of defective plans, because even if the plans are defective, the defect did not cost the owner any additional money.

It can be a tricky concept to explain–even some plaintiff’s lawyers that I’ve dealt with fail to understand the concept.  However, it is an important part of many defenses.

Questions?  Comments?  Ever experienced a “betterment” situation yourself?  Share in the comments section, below.

 

With Construction, Compromise is Always an Option (guest post)

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Chris Hill, attorney, construction law.

Chris Hill, attorney, construction law.

Today, we have a guest post from one of our favorite  Virginia lawyers- Chris Hill. 

As always, he knocks it out of the park with another worthy post explaining why biting the bullet and settling your claim sometimes is the way to go. 

Here is Chris’s official bio:  Christopher G. Hill, LEED AP is Virginia Supreme Court certified mediator, construction lawyer and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC.  Chris authors the Construction Law Musings blog where he discusses legal and policy issues relevant to construction professionals.  His practice concentrates on mechanic’s liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals. 

Without further adieu, take it away Chris!

As always, thanks to Melissa for letting a Blue Devil invade her blog. I always enjoy the opportunity. Now, on with the post.

I know, you read a title like this and your first thought is “I’ll never have to compromise, if I get into trouble, I’ll be in the right!” You followed your friendly construction attorney’s advice, drafted a great contract (using a “belt and suspenders” approach) and do good work! What could possibly go wrong?

Well, among other things: 1. An owner may not pay the general contractor that you subcontracted to, 2. Weather could cause delays beyond your control, or 3. (yes, I’ll say it here) the architect may not like your work and what you did with his or her masterpiece of design. [Editor’s note: architectural plans exist for a reason, people!]. These three were just off the top of my head. Given that “Murphy was an optimist,” there are many other things totally beyond your control as a construction pro that can and likely will go wrong. The question is how to make the best of that bad situation.

Lets skip the easy points and head straight for the title of the post. You’ve already done all you can to “fix” the situation: increased manpower, shuffled your workforce, and gotten the work done as soon as possible. The party that should be paying you has decided not to do so. You decide that you need to do something besides beg for your money.

At this point you have a couple of options (not mutually exclusive): Mediation or Litigation/Arbitration. The second option is the “nuclear” option and to be used as a last resort. Remember, this is a zero sum game with no winners once the lawyers start filing papers. You will spend money that you didn’t plan to spend and take focus away from your business.

The first option is where you compromise. While you may not get the result that you may get by going to the mat in litigation, namely a judgment for everything that you would have gotten had you been paid in full, mediation has its advantages.

What are they? 1. The big one is control. With litigation or arbitration, you are turning your fate (and possibly the fate of your business) over to a third party. In mediation, you get some control and get to creatively determine the best way to solve the problem. 2. After anywhere from a few hours to a day, the dispute is resolved. Compare this to the several months to several years of litigation and you see where this would help. 3. It cuts off the attorney fee spigot much sooner than the alternative. While I as a construction attorney don’t mind being paid, you can’t run a business profitably with a monthly legal bill.

While a compromise is never the ideal, it is in most cases far better than the alternative.

Thanks, Chris!  It is a tough message to hear when you are in the thick of battle, proving that you are right, but the economic realities should always be considered before starting down the long path toward a court trial. 

Now it is your turn.  Have you settled or mediated a claim purely to put the economic pain of litigation to rest?  Do you regret that decision, or feel it was for the best?  Share in the comment section below.

Lessons from a Diner: Up Front Costs can Save You Money in your Engineering Practice (law note)

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greekgrilled.jpgI happen to frequent a place in my hometown called Elmo’s Diner.  A lot.  As in, many of the servers know me by name.  The food is good, yes.  The selection is great.  But there is a much more important reason that I go there over and over again– the service.  Elmo’s seems to always have enough staff on hand, and they also work together to make sure your wait is never very long.

There are some other places in town that skimp on hiring waiters and waitresses.  I guess they figure, the fewer they have working at any one time, the less money they have to pay out.  Even though, of course, waiter minimum wage is much lower than regular minimum wage due to the tip factor.  But some of these other places (who shall remain unnamed) really do seem to have the mindset that they will save money by not hiring enough staff for the number of customers.

Maybe that thinking works for them- in the short run.  Do you know how much money I spend at Elmo’s Diner?  Let’s just put it this way– I really should invest in direct deposit with them!  These other places?  I forget, and go to them every now and again, thinking, it can’t be all bad, right?  And almost always, I remember why I do NOT go to them.

Now, back to construction.  Many professional service firms are like the unmentionable restaurants above– they skimp on things that “cost money”.  Notably, in two areas (1) professional liability insurance (errors & omissions coverage), and (2) getting legal assistance at the beginning of a project.  These architects & engineers are making the same short-sighted mistake, thinking they are “saving money.”  And yet, very often, in the long run they are costing themselves money– in contract disputes, legal wrangling at project end, or in paying out of pocket for large claims.

You should have E&O insurance if you are a working professional.  Period.  You should also have your contracts and proposals reviewed by a lawyer.  Preferably, before any major new undertaking.  The up front costs are small, but the impact can be huge.  Just ask anyone at Elmo’s.

Your turn.  Are there places that you frequent because of their superior service?  Do the extra costs seem to pay for themselves over time?  Share below. 

Belts, suspenders, and breakfast bars: construction contract tips (law note)

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SuspendersBelts, suspenders, and breakfast bars.  Want to know what they have in common, or how they relate to your construction contracts?

Take a gander over to Construction Law Musings this morning, where I am guest-posting on the importance of being clear– very clear– in your construction contracts.

Key takeaways?

  •  clear up possible points of confusion
  •  don’t “wing it” with old contracts
  •  read your entire contract during the negotiation phase

Read the entire post at this link:  Belt & Suspenders: the preferred style for your Construction Contract.

See you there!

 

 

 

Give Way or Yield? The jurisdiction of your contract does matter! (Law note)

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give way signHave you ever been to England?  If so, you’ve likely seen their version of our “Yield” sign– the “Give Way” sign.  It is a bit jarring to those from this side of the “big pond”.

Similarly, contracts can be worded differently– and, interpreted differently– depending on the state that you are in.  This is why it is always a good idea to have your contract or proposal vetted for the state(s) where you provide professional services.

When confronted with a “give way” sign you have the general idea of yielding, but might be confused by that whole “left side of the road” thing in some countries, where if you are turning right, you must give way to all vehicles coming towards you including those turning left.  Likewise, you might have a good understanding of your construction contract in one state, but not how it would be interpreted in another state.

As just one of many examples– the statute of repose can vary widely.  In North Carolina, it is 6 years.  In South Carolina, it is 10 years.   The jurisdiction (state) that you are in does matter– sometimes critically so.

Have you ever found yourself in trouble because of a difference of state laws from what you are most familiar with?  Share in the comments section below.