You can never really hide your problems!
Today, I’m guest posting over at Chris Hill’s Construction Law Musings blog.
My article is on the importance of reporting a potential construction claim to your insurance carrier at the first sign of trouble. Remember, it’s the cover up that always gets you into trouble. Just ask the politicians. Or this kid.
(c) Photo from Maiscio
Today I have the pleasure of another guest post. Christopher G. Hill is lawyer and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC, a LEED AP. Chris has been nominated and elected by his peers to Virginia’s Legal Elite in the Construction Law category on multiple occasions. He specializes in mechanic’s liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals. Chris authors the Construction Law Musings blog where he discusses legal and policy issues relevant to construction professionals.
Chris Hill
First of all, thanks to Melissa for the great opportunity to post here at her blog. She has been kind enough to post on two occasions (here and here) regarding the need for specificity and proper drafting in construction contracts.
Aside from the “back end” implications of a poorly drafted construction contract, there are other benefits to a well drafted set of construction documents. The overarching reason for a well drafted contract is the setting of expectations. Because the “contract is king” in most states, these initial expectations are key.
Without further ado, here are my thoughts on the proper setting of expectations.
1. Make sure that the scope of work is well outlined. Mere reference to “plans and specifications” is not enough. You need to have at least a date for each of these or else a specific list of items to be performed and the specific scope of those items.
2. Be sure that your dispute resolution procedures are well outlined. This needs to be very specific and set forth any claims process. While I am not a huge fan of mandatory arbitration, this is one area where you can tailor the dispute resolution to your needs.
3. Make sure that the change order process is well defined and followed. I cannot count the number of disputes that I have been involved in that come down to this process.
4. While it sounds simple, define what “finished” means. Does it mean acceptance by the architect? The Owner? The General Contractor? What does “acceptance” mean? All of these seem easy to think of answers to until the project is “finished” in your mind and not finished in the owner/general contractors mind.
5. Attorney Fees, Attorney Fees, Attorney Fees! Without this provision (or a statute that allows for the recovery of these fees) most states’ courts will not allow you to recover the fees expended in resolving a contract dispute.
6. Most importantly, read the contract and all of those pesky documents that are referred to by that contract. Without a thorough understanding of the provisions of these other documents, you cannot know your expectations entering into a construction project.
In a world where one word in a contract makes all the difference, setting these expectations early can not only help you out with a dispute but can go a long way toward avoiding the disputes and (heaven forbid) do so without the intervention of your local construction lawyer.
Chris and I welcome your thoughts and comments. Be sure to stop by Chris’ blog and say “hi” too!
For those of you following the proposed revisions to the NC lien law that is currently at the NC House Judiciary Subcommittee B, a quick update: the proposed bill (HB 489) is unlikely to be voted on this legislative session due to its unpopularity with several constituency groups, including both the AIA-North Carolina and the NC Home Builders Association.
According to NC Bar Association Construction Law section chair, Nan Hannah, a vote is unlikely in this legislative session. However, there is the potential for a study commission to continue the conversation and discuss alternative lien law changes that might satisfy all constituents.
Such a study commission will only occur is Subcommittee Chairman Paul Stam hears from those in the industry that such a study commission is desired. In addition to the Construction Section of the Bar, the American Subcontractors Association of the Carolinas supports the idea, as do other industry groups.
If you want to add your voice of support for a study commission, contact Representative Stam or Co-chairman Representative Grier Martin.
Do you believe that the proposed lien law revisions adequately protect designers? Is a study commission worthwhile? Share your thoughts in the comments section, below.
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Photo: (c) freefoto.com via Creative Commons License.
In lieu of a Tuesday Tip, today we have another Guest Post, this time by JW Surety Bonds, an A+ BBB-rated surety agency outside Philadelphia that sells surety bonds nationwide.
Take Me Out to the Surety Bond Game
Nothing says summer like heading to the ballpark for nine innings of cheering, athleticism and hotdogs. While the excitement of professional sporting events may not immediately bring to mind the less-thrilling (yet highly important) world of surety bonds, the two are intricately tied together.
Most obviously, multi-million contract bonds start the process of any new stadium building project. As stadiums get more and more complex, each trying to outdo the previous contender, the financial strain put on contractors becomes more acute. Thorough research is needed by surety companies to weed out wanna-be firms from those with the actual resources and know-how to erect a high definition, 4-D, interactive scoreboard the size of theChryslerBuilding. Team owners need to know their pampered players will have a locker room to call home by the time opening day rolls around, or risk the ire of sports-deprived fans.
Beyond the general infrastructure, bonds are also required to secure everyone’s favorite part of a sporting event: the beer vendors. Corporate catering services or individual vendors hired to work in a stadium may be required to obtain liquor tax bonds as a promise to the government that they will truthfully report and pay all applicable taxes on alcohol sales.
Stadium owners can also require that food vendors of all kinds secure a performance bond to cover the length of the season. While the details of such a performance bond vary widely, they essentially serve to guarantee that the vendor will provide enough soft pretzels, hot dog buns and roasted peanuts to last through playoffs. Should a vendor default on their bond, the stadium owners could file a claim to receive funds to hire someone else to feed the masses for the remainder of the season.
About the only thing in a stadium that can’t be bonded is the players, but not for lack of trying. In 1983, the coach of aUSOlympic volleyball team admitted to requiring his star player to post a performance bond. The player had previously quit, and the coach demanded a cash deposit to guarantee the player would stick around through the 1984 Olympics if he was allowed back on the team. While creating a contractual and financial obligation for a pitcher to complete a no-hitter or a pinch hitter to steal a given number of bases would be appealing to team managers, it’s neither practical nor beneficial.
With the average cost of a new stadium at just below half a billion dollars, and annual sports revenue well into the millions, it makes good business sense for owners to carefully vet and bond all parties involved, ensuring a homerun success.
Questions or comments about surety bonds, and your experiences dealing with bonding companies? Share in the comment section below.
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Photo by vivoandando via Flickr/Creative Commons license.
I was wandering through downtown Wilmington, North Carolina the other week after a trial was pushed off of the court docket. Not two feet away from each other I saw these two signs.
Ask yourself—if you were looking for an (illegal) parking spot to run a quick errand—which spot would you park in? The one with the sign that nicely asks you not to park there, or the one with the sign that says they will tow you if you do? I think we can all agree that in this case, being nice does not help that parking spot’s owner. You know the other guy means business, so you take him seriously.
It is a stark reminder that words can be powerful. Your contract language can make the difference between getting what you want (the empty parking spot) versus having to live with something you don’t (someone in your space). It can mean the difference between the dispute venue you favor or the right to additional compensation.
When it comes to your livelihood, don’t chance it to be nice. Gentlemen’s agreements and saying “please” just don’t cut it any more.
Which parking spot would you use? Do I even have to ask? Saying please is all well and good, but stating your rights upfront will get you farther. Sign up for email updates directly to your inbox, so you never miss a post here at Construction Law NC!
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Photos in this post: 