Tag Archives: lawsuit

Pay when Paid & Pay if Paid

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pay here signRecently I was contacted by several readers asking questions about “Pay when Paid” clauses.  For those of you who may have missed it, I’ve previously addressed Pay When Paid issues in my April 29, 2010 post, Pay When Paid Clauses in the NC Construction Contract.

For a good discussion of the application of N.C. Gen. Stat. 22C-2, the Court of Appeals opinion American Nat. Elec. Corp. v. Poythress Commercial Contractors, Inc., 167 N.C.App. 97, 101, 604 S.E.2d 315, 317 (2004) is worth a read.

In that case, the electrical subcontractor sued the general contractor for delay claims. The contract provided that the contractor would only be liable to the subcontractor for delays if the contractor was compensated for such delays by the owner.  While such a term is clearly a “pay if paid” provision, the Court called the provision a “pay when paid,” and declared it unenforceable in North Carolina.  It seems likely, therefore, that the Court would find that both provisions have the same legal effect in North Carolina– that is, both are unenforceable.

One time when a “pay if/when paid” provision could be enforceable?  Residential construction of fewer than 12 units.

As always, consult your local attorney because such clauses very widely in their enforceability from state to state.

Questions or comments on “pay when paid” or “pay if paid”?  Drop me a line in the comments section, below.

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Photo: “Pay Here” via Freefoto.com / Creative Commons License. 

 

NC Lien & Bond Law Summit: Make Plans to Attend!

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As I have mentioned previously, there are plans in the works to change the lien law for North Carolina projects.  You can attend a Summit on the proposed changes to learn more and have your say.

On Tuesday, January 4, 2011, at 2pm at the NC Bar Center in Cary (8000 Weston Parkway), the  Construction Law Section will host a summit of industry leaders and constituent groups to:

  • explain and discuss the proposed revisions;
  • provide an overview of the draft legislation; and
  • provide an opportunity for industry input

To attend, please RSVP to [email protected] no later than Thursday, December 30, 2010.

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Photo:  “Time for Change” by David Reece via Flickr/Creative Commons license.

Tues Tip: How NOT to give a deposition

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In the off chance that you are sued, you will inevitably have to sit for a deposition at some point. This is a time when, under oath, you are asked to give testimony to the other side’s lawyer. Some depositions are easier than others. Found a little gem on youtube that I thought I’d share as an object lesson in how *not* to give a deposition. The video is about 1 minute long and is worth it to sit through to the end. (Warning: video contains cursing at end, so don’t watch if that offends):

Comments? Questions? Thoughts on how his angry outburst completely destroys his credibility?  Comment below.

Common Sense Tip: Don’t lose your cool when sued

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Common Sense credit cardDespite the vast number of legal shows on television, as you might suspect:  getting sued is not cool.

Immediately, when threatened with litigation, it seems like everyone and everything is out to get you.  Allegations in complaints can cut deep.  You may want to just bury your head in the sand.  Don’t.  Problems denied can turn figurative mole hills into mountains.   Here are three common sense tips for dealing with the initial shock of being named in a lawsuit:

1.

Run, don’t walk, to your attorney.  If you have insurance coverage, talk to your agent immediately to report the loss so that a claims attorney can be assigned to your case.  Court deadlines are not something to be missed, and so you’ll want to get professional help on your team asap.

2.

Immediately begin to gather all documentation relating to the Project.  If you have regular paperwork or computer deletion/destruction policies, stop them at once.  Notify everyone in your company that litigation is pending (or threatened) and place holds from any automatic or scheduled deletion of documents. 

3.

Make lists.  Your attorney will need all sorts of information about the Project, even stuff you may not deem relevant.  Making lists can get your attorney up to speed quickly and efficiently.   Lists may include:

  • a general timeline of your involvement with the Project and any key dates (Notice to Proceed, Substantial Completion, First notice of defects, etc)
  • a list of the Project’s players; that is, all companies that you know worked on the Project, their role, and their key employees
  • a list of your employees that dealt with the Project in any capacity, their contact information, and, if they are no longer with your company, whether or not they left on good terms

Ever been in litigation?  Tips you wish you had known right away?  Comment below.

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Photo adapted from “common sense” by Benjamin Gray via Flickr/Creative Commons/Share Alike.

The Attorney on your Shoulder (Tues Tip)

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cat on shoulderI once had a rather abrasive (okay, mean) driver’s education teacher.  He had to drive around all day, risking life and limb, with student drivers who had no clue what they were doing.  I think that would make anyone a little abrasive, so really, I don’t find fault.  However, one tip that he taught me was truly one of those “tips you remember”.  He told all his students that, no matter what else they took away from his class, they should imagine that he was always hovering at their shoulder, and they should drive accordingly. 

How does my drivers’ education teacher relate to construction law issues?

Just like my driver’s ed teacher’s tip for safe driving, today’s Tip is a simple one.  Indeed, perhaps you might even find it a bit silly.  But picture your attorney (and you do have one, right?) hovering over your shoulder when you go about the business of your work. 

Should I really write that offensive reply email while I’m so hot I could scream? Will this one day be used against me in a court of law?  Did I make sure to have a written contract before we started this project?  What should I do to avoid that costly mistake, and get that attorney off my shoulder?  If I set up documentation systems now, at the start of the project, and follow them consistently, will the attorney knock off the nagging?  You get the picture.  Plan for the worst and hope for the best, as they say. 

No one plans to be in a lawsuit.  But it happens.  Make sure that if it happens to you, you have the best chance of a favorable outcome.

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Photo “Shoulder cat sitting” by Oceanic (Drew Robinson) via Flickr/Creative Commons License.