Tuesday, January 17, 2017

Quick Construction Contract Tips: Notice Provisions

Many in the construction industry are concerned about two things in the contract above all else:  how much will I get paid and when.  But while very important, those things only matter IF you will get paid.   An often overlooked provision is the notice provision of the contract.

Sometimes tucked away in terms and conditions, the notice provision can be crucial to getting paid.  More and more construction contracts will require written notice of claims within a certain number of days and submitted by a certain method (i.e. e-mail, facsimile, certified mail, etc.).  When it comes to payment, notice can be important in two areas.   First, if there is a change order for which you are seeking payment, the contract may require you to serve written notice of the conditions giving rise to the claims before you can request payment.  Second, if you are not paid, that gives rise to a claim for non-payment.  If the contract requires written notice of such a claim, and you do not present the written notice, it may be deemed a failure of a "condition precedent" and severely restrict or eliminate your ability to pursue the payment through Court.

Some Courts in New York will "strictly construe" notice provisions and not allow the claims for payment where the notice provision was not fully complied with.  So, the lesson to learn:   read the notice provision and negotiate it.   Make sure that the time period is reasonable.  24 hours notice may not be reasonable.   Likewise, 2 days notice may not be reasonable if the condition manifests on a Friday afternoon and the foreman doesn't report it to the office until Monday afternoon.  More than 2 days will have passed before the office is even aware of the condition.   Therefore, think notices through before signing the contract.  Make sure the period is reasonable and realistic and make sure field supervisors know the requirements so that they can immediately report to the office.  

Vincent T. Pallaci is the managing member of Kushnick Pallaci PLLC.   His practice concentrates on construction law including contract drafting and review.

Saturday, December 24, 2016

Contractor Waived Claims Not Expressly Set Forth in Notice

The First Department of the Appellate Division recently held that a contractor had waived certain claims in connection with a government contract because the contractor did not expressly set forth the claims in an extension of time request.  The decision notes:

The contract governing the construction project required any request for an extension of time filed by petitioner to include a statement, "in detail," that petitioner "waives all claims except for those delineated in the application, and the particulars of any claims which [petitioner] does not agree to waive.

 Apparently, the contractor did not sufficiently identify the claims it wished to preserve when it submitted an extension request.  The Contract Dispute Resolution Board (CDRB) determined that the contractor had, thus, waived the claims.  The Appellate Division agreed and rejected the contractor's argument that the parties prior course of conduct should support no such waiver.  The Court noted that such and argument (called estoppel) is generally unavailable against government agencies and the particular contract at issue here specifically mentioned that the conduct of the City and its agents could not create an estoppel situation.

The case is a good reminder to contractors to carefully read their contracts and be careful in sending out notices.   When sending out any contract notices it is a good idea to engage counsel to review the contract and the notice and make sure that any possible claims are properly preserved.  It is never too early to engage counsel.  A bit of review and consultation during the project could potentially save tens of thousands of dollars on later litigation.

The case was LAWS Const. Corp. v. CDRB.

Vincent T. Pallaci is the managing member of Kushnick Pallaci PLLC.   His practice concentrates on construction law including contract drafting and review.

Saturday, December 17, 2016

Construction Change Orders: Minimize Risk and Improve Efficiency

Avoiding OSHA Citations for Power Operated Tools and Equipment

Okay, maybe its not possible to avoid an OSHA investigation.  Whether it is a targeted investigation or a random check, an OSHA investigation can lead to costly citations (click here for information about challenging OSHA citations).  But remember, OSHA is there to make sure the workplace is safe.  If you follow industry guidelines you are much more likely to avoid potentially costly violations while simultaneously increasing your workplace safety.

OSHA offers many helpful guides, including checklists, to stay in compliance and avoid potential citations.  Here is a checklist provided by OSHA for handling Power Operated Tools and Equipment:


Tuesday, November 15, 2016

Protesting a Construction Contract Award with NY OCS

Certain publicly bid and awarded contracts have to be approved by the New York Office of the State Comptroller.  In those instances where you want to challenge the contract award (sometimes called a bid protest), the Comptroller's office has established procedures to be followed.

Generally, there are two types of protests that you can file with the Comptroller.   One is an appeal of a protest of a decision made by the procuring agency.   The other is a direct protest filed with the Comptroller's office.

Protesting Agency Determination

Any interested party (such as another contractor that bid on the contract and lost) may appeal the contract award and the agency's determination by filing a written protest with the Comptroller within ten (10) business days of its receipt of the agency protest determination.  While the Comptroller can waive the ten (10) day requirement, we never suggest being a test case.  The written appeal must be served on the contracting agency, the successful bidder and any other party that participated in the protest to the agency.

Direct Protest to the Comptroller

A direct appeal to the Comptroller is permitted if (1) the contracting agency does not have a written protest procedure; (2) the contracting agency has not provided notice of its protest procedure in the solicitation document; or (3) the facts that give rise to the protest are not known to, and could not have been reasonably known to, an interested party prior to the date by which a protest was required to be filed with the contracting agency.

The direct protest to the Comptroller, like the agency protest, must be in writing and must be filed within ten (10) days of notice of the contract award.  Again, while the Comptroller can waive the notice requirement, it is not a good idea to be a test case.  In addition, if the appealing party is not provided with notice of the contract award then it may file a protest with the Comptroller at any time after the contract is awarded and prior to the Comptroller's approval of the contract.

To read the Comptroller's detailed procedures you can click here.

Vincent T.  Pallaci is the managing member of Kushnick Pallaci PLLC.   His practice focuses on construction law including issues such as bid protests in the construction industry.