COVER
PREFACE
1 THE LEGAL CONTEXT OF CONSTRUCTION
1. I. INTRODUCTION
2. II. CONTRACT LAW
3. III. EVOLUTION OF CONSTRUCTION LAW
4. IV. TORTS
5. V. STATUTORY AND REGULATORY LAWS AFFECTING THE BUSINESS OF CONSTRUCTION
6. NOTES
2 INTERPRETING THE CONTRACT
1. I. THE IMPORTANCE OF CONTRACT INTERPRETATION
2. II. WHAT IS A CONTRACT?
3. III. THE GOAL OF CONTRACT INTERPRETATION
4. IV. DEFINING CONTRACT TERMS
5. V. INTERPRETING THE CONTRACT'S LANGUAGE
6. VI. THE FACTS AND CIRCUMSTANCES SURROUNDING CONTRACT FORMATION
7. VII. RESOLVING AMBIGUITIES
8. VIII. IMPLIED CONTRACTUAL OBLIGATIONS
9. IX. CONTRACTUAL OBLIGATIONS ARISING BY OPERATION OF LAW
10. NOTES
3 ALTERNATIVE CONTRACTING METHODS
1. I. TRADITIONAL APPROACH TO CONSTRUCTION: ADVANTAGES AND DISADVANTAGES
2. II. INTEGRATED PROJECT DELIVERY
3. III. MULTIPRIME CONTRACTING AND FAST-TRACKING
4. IV. CONSTRUCTION MANAGEMENT
5. V. DESIGN-BUILD CONTRACTING
6. VI. DESIGN-BUILD ASPECTS OF TRADITIONAL CONSTRUCTION
7. VII. CONTRACTOR LIABILITY ISSUES
8. VIII. ENGINEER-PROCURE-CONSTRUCT
9. IX. BUILDING INFORMATION MODELING
10. NOTES
4 PUBLIC-PRIVATE PARTNERSHIPS
1. I. THE P3 ALTERNATIVE
2. II. P3 PROJECT PARTICIPANTS
3. III. P3 FINANCING STRATEGIES
4. IV. P3 RISK ALLOCATION
5. V. CONCLUSION
6. NOTES
5 INTERNATIONAL CONSTRUCTION CONTRACTS
1. I. UNIQUE ISSUES
2. II. PROJECT DELIVERY METHODS AND CONTRACT FORMS
3. III. DISPUTE RESOLUTION
4. NOTES
6 WORKING IN A DIFFERENT STATE
1. I. QUALIFYING TO DO BUSINESS
2. II. STATE REGISTRATION REQUIREMENTS: BONDS TO SECURE PAYMENT OF TAXES
3. III. STATE LICENSING AND QUALIFICATIONS
4. IV. PUBLIC-SECTOR CONSTRUCTION
5. V. STATE STATUTES AND POLICIES AFFECTING CONTRACTUAL RELATIONSHIPS AND TERMS
6. VI. PRESERVATION OF LIEN/BOND RIGHTS
7. VII. PROJECT RISK ASSESSMENT—“FOREIGN STATES”
8. VIII. INFORMATION SOURCES
9. APPENDIX 6.1 CHECKLIST: PROJECTS IN “FOREIGN JURISDICTIONS”
10. NOTES
7 COMPETING FOR THE CONTRACT
1. I. INTRODUCTION: THE RATIONALE FOR COMPETITION
2. II. KEY CONCEPTS IN TRADITIONAL PUBLIC COMPETITIVE BIDS—RESPONSIVENESS AND RESPONSIBILITY
3. III. THE “LOWEST AND BEST” BIDDER
4. IV. NEGOTIATED “BEST VALUE” SELECTION PROCESS
5. V. ELECTRONIC BIDS
6. VI. REVERSE AUCTIONS
7. VII. GENERAL CONSIDERATIONS WHEN COMPETING ON PRIVATE CONTRACTS
8. VIII. EFFECT OF PAST PERFORMANCE EVALUATIONS ON AWARD PROCESS
9. IX. CONTRACTOR BID MISTAKES
10. X. BID PROTESTS ON STATE OR LOCAL GOVERNMENT CONTRACTS
11. XI. BID BONDS
12. XII. “BID SHOPPING”: WHAT IS THE PRIME CONTRACTOR'S OBLIGATION TO THE SUBCONTRACTOR SUBMITTING THE LOWEST PRICE?
13. XIII. HOLDING SUBCONTRACTORS AND VENDORS TO THEIR BIDS
14. XIV. STATUTE OF FRAUDS ISSUES
15. XV. DAMAGES
16. NOTES
8 THE UNIFORM COMMERCIAL CODE AND THE CONSTRUCTION INDUSTRY
1. I. APPLICABILITY TO CONSTRUCTION PROJECTS—PURCHASING EQUIPMENT AND MATERIALS
2. II. DETERMINING WHEN ARTICLE 2 APPLIES
3. III. MODIFYING U.C.C. OBLIGATIONS
4. IV. CONTRACT FORMATION UNDER THE U.C.C.
5. V. RISK OF LOSS
6. VI. INSPECTION, ACCEPTANCE, REJECTION, AND REVOCATION OF ACCEPTANCE
7. VII. WARRANTIES UNDER THE U.C.C.
8. VIII. STATUTE OF LIMITATIONS AND COMMENCEMENT OF THE WARRANTY PERIOD
9. IX. PERFORMANCE ISSUES
10. NOTES
9 THE DESIGN PROFESSIONAL'S AUTHORITY AND RESPONSIBILITY
1. I. OVERVIEW
2. II. STANDARD OF CARE, PROFESSIONAL RESPONSIBILITY, AND LIABILITY
3. III. THE DESIGN PROFESSIONAL'S AUTHORITY
4. IV. THE DESIGN PROFESSIONAL'S ADMINISTRATIVE FUNCTIONS
5. V. THE DESIGN PROFESSIONAL'S OTHER DUTIES
6. VI. THE DESIGN PROFESSIONAL'S LIABILITY TO THE CONTRACTOR AND THIRD PARTIES
7. VII. STATUTES OF REPOSE
8. VIII. EFFECTS OF CONTRACTUAL LIMITATIONS ON DESIGN PROFESSIONAL LIABILITY
9. IX. ASSUMPTION OF DESIGN LIABILITY BY THE CONTRACTOR
10. X. SHARED RESPONSIBILITY AND RISK
11. XI. THE DESIGN PROFESSIONAL'S COPYRIGHT FOR DESIGN DOCUMENTS
12. NOTES
10 SUBCONTRACT ADMINISTRATION AND DISPUTE AVOIDANCE
1. I. DISPUTE AVOIDANCE BEGINS AT THE BIDDING STAGE
2. II. THE SUBCONTRACT AGREEMENT
3. III. SHOULD SUBCONTRACTORS BE BONDED?
4. IV. DISPUTE AVOIDANCE BY DILIGENT PROJECT ADMINISTRATION
5. NOTES
11 CONTRACT CHANGES
1. I. WHAT IS A CHANGES CLAUSE?
2. II. RECOVERY UNDER THE CHANGES CLAUSE
3. III. CONSTRUCTIVE CHANGES
4. IV. CARDINAL CHANGES
5. V. THE IMPACT OF NUMEROUS CHANGES ON UNCHANGED WORK
6. VI. IMPOSSIBILITY/IMPRACTICABILITY
7. NOTES
12 DIFFERING SITE CONDITIONS
1. I. “DIFFERING SITE CONDITION” DEFINED
2. II. RESPONSIBILITY FOR DIFFERING SITE CONDITIONS
3. III. STANDARD INDUSTRY DIFFERING SITE CONDITIONS CLAUSES
4. IV. COMPARISON OF DIFFERING SITE CONDITION PROVISIONS
5. V. OPERATION OF THE DIFFERING SITE CONDITIONS CLAUSE
6. VI. STUMBLING BLOCKS TO RECOVERY
7. VII. RELIEF IN THE ABSENCE OF A CONTRACT PROVISION
8. APPENDICES—SITE INVESTIGATION CHECKLISTS
9. APPENDIX 12.1: PROJECT CHECKLIST: QUALIFYING THE SITE
10. EXHIBIT A: SITE INVESTIGATION RECORD
11. APPENDIX 12.2: PRE-BID ENVIRONMENTAL CONSIDERATIONS
12. NOTES
13 SCHEDULES, DELAYS, AND ACCELERATION
1. I. ALLOCATING THE RISK OF PERFORMANCE TIME IN THE CONTRACT
2. II. USE OF SCHEDULES IN PROJECT MANAGEMENT
3. III. ANALYSIS OF PROJECT DELAY
4. IV. TYPICAL CAUSES OF COMPENSABLE DELAY
5. V. CONCURRENT DELAY
6. VI. EXCUSABLE BUT NONCOMPENSABLE DELAYS
7. VII. ACCELERATION
8. VIII. CONTRACTUAL LIMITATIONS TO RECOVERY FOR DELAYS
9. IX. OWNER CLAIMS FOR DELAY
10. X. DELAY CLAIMS AND THE USE OF CPM SCHEDULES
11. XI. DOCUMENTATION TO SUPPORT DELAY CLAIMS
12. NOTES
14 INSPECTION, ACCEPTANCE, WARRANTIES, AND COMMISSIONING
1. I. INSPECTION
2. II. ACCEPTANCE
3. III. CONTRACTUAL WARRANTIES
4. IV. PROJECT COMMISSIONING AND POST-ACCEPTANCE FACILITY OPERATIONS
5. NOTES
15 MANAGEMENT TECHNIQUES TO LIMIT RISKS AND AVOID DISPUTES
1. I. CONSTRUCTION: A RISK-PRONE BUSINESS
2. II. QUALIFYING THE PROJECT AND THE PARTICIPANTS
3. III. DEFINING RIGHTS, RESPONSIBILITIES, AND RISKS: PARTIES AND THEIR CONTRACTS
4. IV. CONTRACT FRAMEWORK
5. V. AVOIDING AND PREPARING FOR DISPUTES THROUGH PROPER MANAGEMENT AND DOCUMENTATION
6. VI. PRUDENT AND RESPONSIBLE ESTIMATING
7. VII. ESTABLISH STANDARD OPERATING PROCEDURES
8. VIII. ESTABLISH LINES OF COMMUNICATION
9. IX. PROJECT DOCUMENTATION
10. X. ELECTRONIC COMMUNICATIONS ON CONSTRUCTION PROJECTS
11. XI. COST ACCOUNTING RECORDS
12. XII. MONITORING THE WORK THROUGH SCHEDULING
13. XIII. PRESERVING ELECTRONICALLY STORED INFORMATION
14. XIV. CONCLUSION
15. APPENDIX 15.1 CONSENSUSDOCS 221—CONTRACTOR'S STATEMENT OF QUALIFICATIONS FOR A SPECIFIC PROJECT
16. APPENDIX 15.2 LOGS AND FORMS
17. APPENDIX 15.2A FORMAT FOR NOTICE CHECKLIST
18. APPENDIX 15.2B SAMPLE PARTIAL NOTICE CHECKLISTS
19. APPENDIX 15.2C FORMS
20. APPENDIX 15.2D REQUEST FOR INFORMATION
21. APPENDIX 15.2E TELEPHONE CONVERSATION MEMORANDUM
22. APPENDIX 15.2F SAMPLE DAILY REPORT
23. APPENDIX 15.2G NOTICE OF BACKCHARGE
24. APPENDIX 15.2H FIELD ORDER STATUS CHART
25. APPENDIX 15.2I LOG: INCOMING CORRESPONDENCE
26. APPENDIX 15.2J LOG: OUTGOING CORRESPONDENCE
27. NOTES
16 PAYMENT BONDS
1. I. PAYMENT BONDS REQUIRED BY STATUTE
2. II. PAYMENT BONDS ON PRIVATE PROJECTS
3. III. WHO IS PROTECTED BY PAYMENT BONDS
4. IV. WORK QUALIFYING FOR PAYMENT BOND COVERAGE
5. V. RECOVERY UNDER PAYMENT BONDS FOR EXTRA WORK, DELAY DAMAGES, OR LOST PROFITS AND OTHER COSTS
6. VI. DISTINGUISHING BETWEEN PAYMENT BOND CLAIMS AND PERFORMANCE BOND CLAIMS
7. VII. PROCEDURAL REQUIREMENTS FOR PAYMENT BONDS
8. VIII. EFFECT OF PAYMENT BONDS ON LIEN RIGHTS
9. IX. THE SURETY'S DEFENSES TO PAYMENT BOND LIABILITY
10. NOTES
17 PERFORMANCE BONDS AND TERMINATIONS
1. I. SURETY PERFORMANCE BONDS
2. II. TERMINATION
3. NOTES
18 PROVING COSTS AND DAMAGES
1. I. BASIC DAMAGE PRINCIPLES
2. II. METHODS OF PRICING CLAIMS
3. III. CONTRACTOR DAMAGES
4. IV. OWNER DAMAGES
5. NOTES
19 AN OVERVIEW OF ENVIRONMENTAL AND SAFETY CONCERNS ON THE CONSTRUCTION SITE
1. I. SOURCES OF ENVIRONMENTAL REGULATION AND LIABILITY
2. II. MINIMIZING ENVIRONMENTAL RISKS PRIOR TO CONTRACTING
3. III. MANAGEMENT TECHNIQUES FOR ENVIRONMENTAL RISKS DURING CONTRACT PERFORMANCE
4. IV. MOLD: DEVELOPING A PROGRAM TO LIMIT LIABILITY
5. V. ENVIRONMENTALLY FRIENDLY CONSTRUCTION: GREEN BUILDINGS
6. VI. CONSTRUCTION SAFETY
7. NOTES
20 CONSTRUCTION INSURANCE
1. I. IMPORTANCE OF INSURANCE PLANNING
2. II. INTRODUCTION TO THE LANGUAGE OF INSURANCE POLICIES
3. III. TYPES OF INSURANCE
4. IV. CONTRACT REQUIREMENTS FOR INSURANCE
5. V. PROMPT ACTION TO PROTECT POTENTIAL COVERAGE
6. VI. INSURER'S RESPONSE TO CLAIMS
7. VII. ROUTINE COVERAGE ISSUES
8. VIII. CONCURRENT CAUSES
9. IX. CONSTRUCTION INSURANCE AND MOLD CLAIMS
10. NOTES
21 LABOR AND EMPLOYMENT ISSUES AFFECTING THE CONSTRUCTION INDUSTRY
1. I. IMMIGRATION ISSUES
2. II. EMPLOYEE SAFETY AND HEALTH
3. III. WAGE AND HOUR REQUIREMENTS
4. IV. EMPLOYEE BENEFITS: ERISA
5. V. EMPLOYMENT DISCRIMINATION
6. VI. FAMILY AND MEDICAL LEAVE ACT
7. VII. UNION LABOR
8. VIII. EMPLOYEE-BACKGROUND INVESTIGATIONS
9. IX. WORKERS' COMPENSATION—EXCLUSIVE REMEDY ASSERTIONS
10. NOTES
22 BANKRUPTCY IN THE CONSTRUCTION SETTING
1. I. INTRODUCTION
2. II. THE PLAYERS
3. III. KEY TERMS
4. IV. BANKRUPTCY CODE
5. V. STATUS OF THE DEBTOR'S CONTRACTS
6. VI. STATUS OF MATERIALS AND EQUIPMENT
7. VII. STATUS OF CONTRACT FUNDS
8. VIII. OTHER SOURCES OF FUNDS
9. NOTES
23 RESOLVING CONSTRUCTION DISPUTES
1. I. EARLY CLAIM RECOGNITION AND PREPARATION
2. II. EARLY INVOLVEMENT OF EXPERTS AND ATTORNEYS
3. III. DEMONSTRATIVE EVIDENCE
4. IV. CONTEMPORANEOUS RECORDS
5. V. COMPONENTS OF A WELL-PREPARED CLAIM DOCUMENT
6. VI. CALCULATING AND PROVING DAMAGES
7. VII. PURSUING NEGOTIATION AND SETTLEMENT
8. VIII. ARBITRATION
9. IX. LITIGATION
10. NOTES
24 FEDERAL GOVERNMENT CONSTRUCTION CONTRACTING—AN OVERVIEW
1. I. INTRODUCTION: THE KEY DIFFERENCES
2. II. CONTRACTOR SELECTION
3. III. SOCIAL-ECONOMIC POLICIES
4. IV. RESOLUTION OF CONTRACT DISPUTES
5. V. STANDARDS OF CONDUCT FOR CONTRACTORS
6. APPENDIX 24.1 INTERNET RESOURCES FOR FEDERAL GOVERNMENT CONSTRUCTION CONTRACTS
7. NOTES
INDEX
END USER LICENSE AGREEMENT

List of Tables

Chapter 4
1. Table 4.1: State P3 Legislation
Chapter 15
1. Table 15.1: Qualifying the Project
2. Table 15.2: Qualifying the Participants
3. Table 15.3: Qualifying the Project Site/Locale
4. Table 15.4: Qualifying the Project Documentation System
Chapter 19
1. Table 19.1: Action Levels and PELs
Chapter 24
1. Table 24.1: Key Concepts Applicable to Federal Construction Contracts
2. Table 24.2: Monetary Limits on Sole-Source Set-Aside Awards for Construction Con...
3. Table 24.3: Performance of Work Requirements and Limitations on Joint Ventures

Smith, Currie & Hancock's COMMON SENSE CONSTRUCTION LAW

A Practical Guide for the Construction Professional, Sixth Edition

SIXTH EDITION

Edited by

John M. Mastin, Jr., Eric L. Nelson, and Ronald G. Robey

CHAPTER EDITORS

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John M. Mastin, Jr.

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Library of Congress Cataloging-in-Publication Data:

Names: Mastin, John M., editor. | Nelson, Eric L., 1966- editor. | Robey, Ronald G., editor. | Smith, Currie & Hancock, sponsoring body.

Title: Smith, Currie & Hancock's common sense construction law : a practical guide for the construction professional / edited by John M. Mastin, Eric L. Nelson, Ronald G. Robey, Smith Currie Hancock.

Other titles: Smith, Currie and Hancock's common sense construction law

Description: Sixth edition. | Hoboken, New Jersey : John Wiley & Sons Inc., 2020. | Includes index.

Identifiers: LCCN 2019023498 (print) | LCCN 2019023499 (ebook) | ISBN 9781119540175 (cloth) | ISBN 9781119540199 (adobe pdf) | ISBN 9781119540182 (epub)

Subjects: LCSH: Construction contracts—United States. | Construction industry—Law and legislation—United States.

Classification: LCC KF902 .S63 2020 (print) | LCC KF902 (ebook) | DDC 343.7307/8624—dc23

LC record available at https://lccn.loc.gov/2019023498

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Cover Design: Wiley

PREFACE

The attorneys of Smith, Currie & Hancock have practiced construction law and government contracts law for more than five decades, since its founding in 1965. During that time, we have conducted hundreds of construction and government contract law seminars for clients, trade associations, colleges and universities, and professional groups. Our consistent goal has been to provide a practical, commonsense perspective on the legal issues affecting the construction industry. In many respects, this book reflects a culmination and refinement of those educational endeavors and the practical approach they entail.

Construction law and the related legal concepts are essential to the construction industry because they provide the theories, principles, and generally established rules that contribute to a smooth- running construction process. When that process falters and disputes arise that involve the design and construction of a project, a variety of procedures can be used to resolve these differences. These procedures vary in their legal formalities; however, an appreciation of these processes and principles should not be limited to lawyers. Individuals in management and supervisory positions in the industry must be knowledgeable about what the law requires of their companies and personnel and what they can expect and require from others. Nor can lawyers expect to represent and assist their clients effectively if they focus solely on legal rules and procedures to the exclusion of the business of construction. Construction law and the business of construction are inextricably intertwined and evolve with innovations such as cloud-based solutions, building information modeling (BIM), and public-private partnerships (P3s). It is our intent that this book, in the topics that it covers and the various perspectives and approaches it employs, reflects the interrelationship between the law and the business of construction.

Claims and disputes are addressed throughout this sixth edition of Common Sense Construction Law. They must be in any complete and competent analysis of the construction environment. This book, however, is about much more than preparing claims and resolving disputes once they arise. It also seeks to address practical steps to avoid pitfalls whether the project is performed domestically or internationally, or whether it uses a traditional design-bid-build delivery system or one of the many alternative project delivery systems. Rather, our goal is to help provide the kind of insight and understanding needed to avoid claims and disputes. Reasonable recognition of the contractual allocation of rights, risks, and legal responsibilities, coupled with a spirit of communication and teamwork in the execution of the work, is far more likely to culminate in a successful project than an atmosphere rife with confrontation and dispute. Practical knowledge of the general rules governing employment-related issues can have the same beneficial result. Of course, the possibility of claims and disputes cannot be ignored. Careful attention, planning, and solid documentation are all required to avoid disputes and to deal effectively with them if they become inevitable.

The sixth edition of Common Sense Construction Law is a general teaching tool and is not a substitute for the advice of your attorney. Specific concerns and problems require the timely attention of legal counsel familiar with construction law, government contracts, and employment law. Nevertheless, this book will help you expand your knowledge and awareness of the issues in construction that may affect you at any time. It may not provide all the answers, but you will be well equipped to ask the right questions. To make these materials more useful to you, we have included checklists, sample forms, and summary “Points to Remember” for each chapter.

We thank our clients and the academic professionals who have shared their insights and concerns and provided the opportunities for experience and learning that are shared in this book. We also owe much gratitude to the construction industry as a whole for allowing us as construction attorneys to participate in the challenges of the industry to avoid and resolve problems. We hope this work will contribute to the worthy goals of the industry. We also hope that this book helps its users pursue their interests in and commitments to construction from concept to completion.

SMITH, CURRIE & HANCOCK LLP

Atlanta, Georgia
January 2019