Tag Archives: document

Certificate of Merit to sue architects or engineers? (Tue Tip)

Posted on by

You know how they say the best laid plans can go awry?  Just as unforeseen issues pop up in construction, they also pop up in the practice of law.  So, while it is still Tuesday, I apologize for the late hour of my post.

I bring you good tidings, despite my lateness.  Right now, in the North Carolina General Assembly, is a proposed bill that would require a Certificate of Merit to be filed in civil litigation against an architect, engineer, or a design firm.  If it passes, this would require that an unbiased, third party (who is also a licensed professional) has reviewed the claim and believes it has merit.  

boy holding certificate of merit

This boy has his certificate of merit: will lawsuits against architects and engineers require the same?

Such a pre-lawsuit requirement  has long been a right that doctors enjoy.  Now, there may a chance for architects and engineers to also enjoy protection from otherwise frivolous lawsuits. 

The bill has been introduced, had its first reading, and has been referred to the Judiciary Committee.  While the bill is a long way from passage, it is a good sign that the public recognizes too often professionals are the targets in lawsuits simply because of their “deep pockets” (really!) or their insurance coverage. 

You can keep track of the progress of Senate Bill 435 here. 

(h/t to Kathryn Westcott, ACEC-NC Executive Director)

Photo: (c) John Dolan via Flickr/Creative Commons License.

Which Contract Form Should You Use? (Guest Post)

Posted on by

Nathan Hinch

Today’s Guest Post is by Nathan B. Hinch, an associate at Mueller & Reece, LLC in Bloomington, Illinois, concentrating in the practice of commercial, construction, environmental, and real estate law.  He can be reached at [email protected] and on twitter @NathanHinch. 

 Form Construction Contracts – How Do They Compare, and How Should They Be Used?

By Nathan B. Hinch

Imagine that you are a contractor from the mythical State of Verbalville, a land where the handshake deal is the norm and no one ever puts anything in writing.  If a developer/owner awarded you a project and asked you to sign an AIA Document A101™ form construction contract, along with AIA Document A201™ General Conditions, would you sign it without reading the document?  Of course not.  Assuming that you were willing to consider bucking the verbal trend and sign the document at all, you would likely read it over very carefully first.  You might also consult an attorney, to help you understand the potential risks and liability issues involved with the contract, including the enforceability of the contract under Verbalville State law, and suggest changes to the document.

Now imagine that you are a contractor in my home State of Illinois and are awarded a project in North Carolina.  If the developer/owner handed you a ConsensusDOCS® 200 form construction contract with general conditions and asked you to sign, would you do so without reading it?  Would you consult a professional attorney before signing?  What if you were familiar with the form documents from your work in Illinois?  Would it matter if it was an EJCDC document instead?

I have worked with AIA, ConsensusDOCS®, and EJCDC form documents, and all three are excellent resources that in the right hands can help save time and money for construction projects.  But here’s the point – form contracts are wonderful tools that can help allocate risk and clarify the roles and responsibilities of the parties, but that is all they are.

In the construction field, the leading form contracts have been drafted by teams of experts representing the interest groups in general and supporting teams of attorneys.  If you have never used or read one of these before, I would encourage you to take an evening and read through at least one of those mentioned above.  Given the detail of the documents, it may be difficult to imagine that these forms, without editing, are likely not specific enough for your project.  But keep in mind as you read that these are national forms and are meant to be of use throughout the U.S.  By definition these forms do not generally consider 1) variations in State law requirements and 2) your particular project needs or goals.  For that reason, credible forms such as those produced by AIA, ConsensusDOCS®, or EJCDC will encourage users to consult an attorney before using the document for specific projects.  They are not meant for “plug and play” use.

For a great reference comparing these forms, see Gillies, Heckman, and Perlberg, THE Construction Contracts Book: How to Find Common Ground in Negotiating Design and Construction Clauses, American Bar Association 2008.  The EJCDC and ConsensusDOCS websites both provide a matrix from this book for PDF download.  The book may be purchased from the ABA website here.

[Ed note:  I second Nathan’s book recommendation, which is a great resource for anyone considering the pros and cons of each set of form documents.]

Nathan and I look forward to answering your comments, thoughts, and questions.  Drop us a note!

 

EJCDC Document Training (Tue Tip)

Posted on by
Document Updates sign

Photo (c) EJCDC

We’ve talked previously about Form Construction Contracts, including ConsensusDocs, AIA, and even shown a comparison chart between the two.  Now it is the Engineer’s Joint Contract Documents Committee’s (EJCDC’s) turn. 

The American Council of Engineering Companies (ACEC) is holding a training seminar on key parts of the EJCDC form contracts.  The seminar, entitled “Critical Design-Build Contract Provisions: Understand Legal Issues That Can Put Your Firm in Hot Water“, is scheduled to address several topics and the EJCDC take on those issues, including:

  • Errors and Omissions–Handling of E & O under design-build is complicated due to inability to invoke the betterment rule.
  • Licensing Laws–Since the Design-Build entity holds itself out to be both the “designer-of-record” and the “constructor-of-record”, appropriate professional registrations and business licenses need to be in place.
  • Protests of D-B Bids and Proposals–What to do with protests of design-build procurements includes practical lessons for engineers
  • Design Reviews–Conduct of design reviews under design-build may differ from traditional periodic reviews, because an owner can place itself in a responsible position by dictating changes during the review process rather than relying on the D-B entity to deliver an end-result in conformance with the design.
  • Performance Guarantees–In some instances, owners seek to tie the design-builder to some strict performance standard.
  • Who Owns the Design–On some government design-build contracts, the owner is insisting on owning the design product.
  • Teaming Arrangements–There are many ways for engineers to participate in design-build contracts. Is your risk tolerance such that your firm can go “at risk” or would it be advisable for the firm to retain its agency status?

The Webinar is scheduled for Wednesday, April 20th from 1:30 to 3:00 PM, Eastern Time.  Fees are $199 (members) /$299 (nonmembers).  Click here to register.

Upcoming on the blog:  a guest post discussing one practitioner’s use of each of  three main form documents.  Stay tuned!

ConsensusDocs: Training on the new forms (Tue Tip)

Posted on by

ConsensusDOCS logo

As previously discussed on this blog, one of the form contract sets available for construction projects is that of ConsensusDocs.  ConsensusDocs was created in 2007, based on the (now discontinued) Associated General Contractors of America forms.

The newest ConsensusDocs forms have been released–three years early.   As explained by Chris Hill on his Construction Law Musings  blog, the early release is due to the many changes in the construction industry since the release of the first documents in 2007.

Now there is a free webinar that will discuss the changes to the revised ConsensusDocs forms, including topics such as:

The webinar will take place:

Thursday, March 31st from 3:00 PM- 4:30 PM ET

Questions about ConsensusDOCS or other form contract documents?  Drop me a line in the comment section, below.

 

Unlicensed Contractor & his partnership take a hit (Law Note)

Posted on by

man banging head against wallImagine being told that you will not be paid for a house you constructed pursuant to a contract with homeowners.  And imagine that the reason for not getting paid had to do with whether or not you signed a contract “on behalf of” your partnership or whether you simply signed your individual name.  This is the exact case that Ron Medlin, partner in Ron Medlin Construction, is facing thanks to a recent North Carolina Supreme Court case, Ron Medlin Construction v. Raymond A. Harris, __ N.C. __, (December 20, 2010).

Ron Medlin entered into a contract with the Harris’ for the construction of a home not to exceed $604,800.  Of note, Medlin did not have a licensed general contractor’s license, as is required.  However, Ron Medlin Construction, a partnership, was appropriately licensed as a general contractor, and the partnership performed the work relating to the construction of the residence.

When litigation arose over cost overruns, the Harris’ claimed they did not need to honor the contract because it was with an unlicensed contractor.  Under North Carolina law, any person who performs work in excess of $30,000 needs to be appropriately licensed or he cannot recover for his work in the Courts.  (See Brady v. Fulghum, 309 N.C. 580, 586, 308 S.E.2d 327, 331 (1983)).  The partnership argued that it did not have a contract with the Harris’, yet it performed work in constructing the residence and, therefore, was entitled to recover a just amount under a theory called quantum meruit.  The Court held that the partnership ratified Ron Medlin’s individual acts, and as such the partnership was bound by the (unenforceable) contract and could not recover. 

The Court held, as a matter of law, that:

a contract for the construction of a home or building executed by a partner in a licensed partnership engaged in the construction business is the contract of the partnership unless the remaining partners can show that the partner was not authorized to act on behalf of the partnership and, if not so authorized, the partnership did not ratify the contract.

Moral of the story?  It is important that you follow the rules in signing and performing under construction contracts, as well as in maintaining your proper corporate formalities.  It might even be worth having your attorney review your construction contract before you sign it.    Unless, that is, you don’t mind that chance that you may end up performing some of your work for free.

Take a minute right now and sign up for email updates so you never miss one of the posts! 

—————————–

Photo:  “361/365 days -it feels good to stop” by badjonni via Flickr/Creative Commons license.