CHAPTER ONE: The Owner
1.0 INTRODUCTION
1.1 FINANCING THE CONSTRUCTION PROJECT
1.2 PAYMENT
1.2.1 Lien Waivers
1.2.2 “Pay-if-Paid” and “Pay-when-Paid” Clauses
1.2.3 Retainage
1.3 OWNER OBLIGATIONS
1.3.1 Implied Obligations and Contracts Implied by Law
1.3.2 The Spearin Doctrine
1.4 RISK ALLOCATION AND SHIFTING
1.4.1 Indemnity Provisions
1.4.2 Insurance
1.5 SUBSTANTIAL COMPLETION, PUNCH LIST AND FINAL COMPLETION
1.5.1 Substantial Completion
1.5.2 Punch List Items
1.5.3 Final Completion
1.5.4 Owner Termination Provisions
1.5.4.1 Termination for Convenience
1.5.4.2 Termination for Cause
1.5.5 Venue Provisions
CHAPTER TWO: The Contractor
2.0 INTRODUCTION
2.1 LICENSURE
2.1.1 The Licensure Process
2.1.2 Qualification with the Alabama Secretary of State and Obtaining Local Business Licenses
2.1.3 General Contractor and Subcontractor Defined
2.1.4 Bidding and Prohibited Efforts to Circumvent Licensure Requirements
2.1.5 Bidding on Private Projects
2.2 CONVENTIONAL CONSTRUCTION CONTRACTS
2.2.1 Type of Contract and Amount
2.2.1.1 Lump Sum Contracts
2.2.1.2 Cost Plus Contracts
2.2.1.3 Cost Plus a Fee with a Guaranteed Maximum Price
2.2.1.4 Unit Price Contracts
2.2.2 Scope of Work
2.2.3 Schedule of Values
2.2.4 Construction Schedule
2.2.5 Delay Provisions
2.2.5.1 Typical Owner-Contractor Delay Provisions
2.2.5.2 Liquidated Damages Provisions
2.2.5.3 No Damage for Delay Provisions
2.2.6 Indemnity and Insurance
2.2.6.1 Introduction
2.2.6.2 Breadth of Indemnity Provisions
2.2.6.3 Insurance Requirements and Additional Insured Status
2.2.7 Limitation of Liability and Consequential Damages Waiver Provisions
2.2.7.1 Limitation of Liability Provisions
2.2.7.2 Consequential Damages Waivers
2.2.8 Responsibility for Permits and Fees
2.2.9 Change Orders and Construction Change Directives
2.2.9.1 Introduction
2.2.9.2 Rights Afforded Under Change Order Clauses
2.2.9.3 Change Order Protocol
2.2.9.4 Construction Change Directives
2.2.10 Order of Precedence and Battle of the Forms Provisions
2.2.11 Site Conditions Provisions
2.2.11.1 Site Visits
2.2.11.2 Limitation of Liability for Site Conditions
2.2.12 Code Compliance
2.2.12.1 Limitation of Liability
2.2.13 Contractor’s Warranty
2.2.13.1 Express Warranties
2.2.13.2 Implied Warranties
CHAPTER THREE: Public Construction
3.1 INTRODUCTION
3.2 FEDERAL GOVERNMENT CONTRACTING
3.3 STATE AND LOCAL CONTRACTING
3.3.1 Competitive Bidding
3.3.1.1 Bid Solicitation and Pre qualification
3.3.1.2 Bid Selection
3.3.1.3 Bid Bonds
3.3.2 Enforceability of Bids
3.3.2.1 Contractor Bids
3.3.2.2 Bid Errors
3.3.2.3 Subcontractor and Supplier Quotations
3.3.3 Post-Award Relief
3.4 BID PROTESTS
3.5 CONTRACT AWARD
3.6 PERFORMANCE OF PUBLIC WORKS CONTRACTS
3.6.1 Contract Documents
3.6.2 Payment Issues
3.6.3 Change Orders
3.6.4 Disputes
CHAPTER FOUR: Building Codes, Standards, and Permits
4.1 INTRODUCTION
4.2 TYPES OF GOVERNING CODES
4.2.1 State Requirements
4.2.2 Local or Municipal Requirements
4.3 BUILDING PERMITS
4.4 BUILDING INSPECTIONS AND CERTIFICATES OF OCCUPANCY
CHAPTER FIVE: The Architect/ Engineer
5.1 INTRODUCTION
5.2 STATE LAWS GOVERNING THE PRACTICE OF ARCHITECTURE & ENGINEERING
5.2.1 Statutory Regulation of Architects
5.2.2 Statutory Regulation of Engineers
5.2.3 Associations of Architects and/or Engineers
5.3 OWNER-ARCHITECT/ENGINEER AGREEMENT
5.3.1 Types of Agreements
5.3.2 Limitation on Services
5.3.3 Additional Services
5.4 ARCHITECT-CONSULTANT AGREEMENTS
5.5 THE ARCHITECT/ENGINEER’S RESPONSIBILITIES
5.5.1 Design
5.5.2 Bidding and Negotiation
5.5.3 Construction Administration
5.5.3.1 “Inspection”
5.5.3.2 Review of Applications for Payment
5.5.3.3 Review and Approval of Contractor Submittals
5.5.3.4 Authority to Order Changes
5.5.3.5 The Architect as Judge
5.5.4 Post-Construction
5.6 THE ARCHITECT ENGINEER'S LIABILITY
5.6.1 Liability to the Owner
5.6.2 Liability to the Contractor
5.6.2.1 Inadequate Plans and Specifications
5.6.2.2 Negligent Construction Administration
5.6.3 Liability to Subcontractors
5.6.4 Liability to Other Third Parties
5.6 PROFESSIONAL LIABILITY INSURANCE
CHAPTER SIX: The Subcontractor
6.1 INTRODUCTION
6.2 OWNER’S TYPICAL CONTRACT OBLIGATIONS
6.2.1 Duty of Payment
6.2.2 Duties of Cooperation and Disclosure
6.3 OWNER’S IMPLIED OBLIGATIONS
6.3.1 Warranty of Plans and Specifications
6.3.2 Duty Not to Delay, Hinder or Interfere With the Contractor’s Performance
6.4 OWNER’S MATERIAL CHANGE IN CONTRACT
6.5 DISCLAIMER OR WAIVER OF OWNER’S OBLIGATIONS
CHAPTER SEVEN: Changes in the Work
7.1 INTRODUCTION
7.2 CONTRACT TERMS FOR CHANGES
7.3 CHANGE PROTOCOL
7.4 WHEN IS EXTRA COMPENSATION DUE?
7.5 CARDINAL CHANGES
7.6 “DIRECTED CHANGE” OR “FORCE ACCOUNT” CLAUSES
7.7 UNDOCUMENTED ORAL CHANGE ORDERS
7.8 CHANGES DUE TO DEFECTIVE PLANS AND SPECIFICATIONS
7.9 CONSTRUCTIVE CHANGES
7.10 ADDITIONAL, UNAUTHORIZED OR NON-CONFORMING WORK
7.11 CHANGES BY OUTSIDE FORCES
CHAPTER EIGHT: Site Conditions
8.1 INTRODUCTION
8.2 TYPES OF SITE CONDITIONS
8.3 RESPONSIBILITY/DISCLAIMERS
8.4 NOTICE
CHAPTER NINE: Damages
9.1 OTHER DAMAGES
9.1.1 Owner’s Damages for Contractor’s Inadequate or Incomplete Performance
9.1.2 Contractor’s Damages
9.1.2.1 Contractor Damages for Owners’ Late Payment
9.1.2.2 Contractor Damages for Owner’s Termination of Project
9.2 ATTORNEY’S FEES
9.3 PREJUDGMENT INTEREST
9.4 PUNITIVE DAMAGES
9.5 EXCLUSIONS AND LIMITATIONS ON RECOVERABLE DAMAGES
9.5.1 “No Damages for Delay” Clauses
9.5.2 Monetary Limitations
9.5.3 Waivers of Consequential and other Damages
9.5.4 Duty to Mitigate Damages
CHAPTER TEN: Bonds
10.1 INTRODUCTION
10.2 A CONTRACTOR’S RIGHT TO RELY ON THE OWNER’S REPRESENTATION OF CONDITIONS
10.2.1 Duty to Investigate Site
10.2.2 Duty to Disclose
10.2.3 Disclaimers
10.3 NOTICE
10.4 CONTRACTUAL REMEDIES
10.4.1 Type I Conditions
10.4.2 Type II Conditions
10.4.3 Hazardous Materials
10.5 SITE CONDITIONS NOT COVERED BY THE “DIFFERING SITE CONDITIONS” CLAUSE
10.6 COMPENSATION
10.7 BONDS AND LIENS IN PUBLIC CONTRACTING – THE MILLER ACT
10.7.1 Introduction
10.7.2 The Federal Miller Act – Making a Claim on a Federal Project
10.7.2.1 Purpose and Reach of the Miller Act
10.7.2.2 Materials and Equipment
10.7.2.3 Process for Asserting a Miller Act Claim
10.7.2.3.1 Time periods in which to assert claims
10.7.2.3.2 Notice Requirements
10.7.2.3.3 Initiating a Lawsuit to Perfect the Miller Act Claim
10.7.2.3.4 Arbitrability of Miller Act Claims
10.7.2.3.5 Contractual Waiver of Miller Act Claims
10.7.2.3.6 Recovery of Attorneys’ Fees
10.7.2.4 Payment of Successful Bond Claims
10.7.3 Alabama’s Little Miller Act – Making a Claim on State, County and Municipal projects
10.7.3.1 Bond Requirements
10.7.3.2 Who is Afforded Protection Under the Little Miller Act
10.7.3.3 What is Covered?
10.7.3.3.1 Labor and Materials
10.7.3.3.2 Necessary Rental Equipment and Items Consumed During the Work
10.7.3.3.3 Repairs Necessary for Completion of the Project
10.7.3.3.4 Freight and Storage Expenses
10.7.3.4 Mandatory Notice Requirement
10.7.3.5 Venue for Little Miller Act Claims
10.7.3.6 Parties to a Little Miller Act Claim
10.7.3.7 Limitations Period
CHAPTER ELEVEN: DAMAGES AND DELAYS
11.1 INTRODUCTION
11.2 DELAY AND ITS CONSEQUENCES
11.2.1 Classification of Delays
11.2.1.1 Excusable Delay
11.2.1.2 Compensable Delay
11.2.1.3 Inexcusable Delay
11.2.1.4 Concurrent Delay
11.2.1.5 Critical Delay
11.2.2 Consequences of Delay
11.3 CONTRACTUAL DELAY AND SCHEDULING
PROVISIONS
11.4 REMEDIES FOR DELAYS
11.4.1 Owner Remedies
11.4.2 Contractor Remedies
11.5 PROOF AND RECOVERY OF DAMAGES FOR DELAY
11.5.1 Methods of measuring and Proving Delays
11.5.2 Types of Delay Damages
11.5.2.1 Classification of Damages
11.5.2.2 Contractors’ Delay Damages
11.5.2.3 Owners’ Delay Damages
11.5.2.4 Pricing and Proof of Damages
11.6 OTHER DAMAGES
11.6.1 Owners’ Damages for Contractors’
Defective or Incomplete Performance
11.6.1.1 Types of Damages
11.6.1.2 Measure of Damages
11.6.2 Contractors’ Damages
11.6.2.1 Types of Damages
11.6.2.2 Late Payment Damages
11.6.2.3 Termination Damages
11.7 ATTORNEYS’ FEES
11.8 PREJUDGMENT INTEREST
11.9 PUNITIVE DAMAGES
11.10 EXCLUSIONS OR LIMITATIONS OF DAMAGES
11.10.1 “No Damages for Delay” Clauses
11.10.2 Monetary Limitations
11.10.3 Waivers of Consequential and Other
Damages
11.10.4 Duty to Mitigate Damages
CHAPTER TWELVE: BONDS
12.1 INTRODUCTION
12.2 CONTRACTOR BONDS
12.2.1 Federal Projects – The Miller Act
12.2.2 State Public Works – The “Little
Miller Act”
12.2.3 Performance Bonds
12.2.4 Payment, or Labor and Materials,
Bonds
12.2.5 Private Bonds
12.3 PAYMENT BOND CLAIM PRACTICE
12.3.1 Coverage of Bonds
12.3.2 Notice Requirements
12.3.3 Action on Bond
12.3.3.1 Federal Contracts
12.3.3.2 State Public Works
Contracts
12.3.3.3 Private Contracts
12.4 PERFORMANCE BOND PRACTICE
12.4.1 Contract Termination
12.4.2 Notice Requirements
12.4.3 Action on Bond
12.5 BAD FAITH
CHAPTER THIRTEEN: Liens
13.1 INTRODUCTION
13.2 NATURE OF LIEN
13.3 CREATION OF LIEN
13.4 PROPERTY SUBJECT TO LIEN
13.5 FULL PRICE LIEN VERSUS UNPAID BALANCE LIEN
13.6 PRIORITY OF LIEN
13.7 PERFECTING AND ENFORCING MECHANIC’S LIEN
13.7.1 Notice to Owner
13.7.2 Verified Statement of Lien
13.7.3 Lawsuit to Enforce Mechanic’s Lien
13.8 BONDING OFF LIEN
13.8.1 Bonding Off Lien if No Lawsuit Pending
13.8.2 Bonding Off Lien if Lawsuit Pending
13.8.3 Depositing Funds in Court’s Registry
13.9 LIEN RELEASES AND WAIVERS
13.9.1 Release of Recorded Lien
13.9.2 Waiver of Right to Claim Lien
CHAPTER FOURTEEN: Effective Collection Techniques
14.1 INTRODUCTION
14.2 ESTABLISHING THE RELATIONSHIP
14.2.1 Proper Documentation
14.2.2 References
14.3 MONITORING THE RELATIONSHIP
14.4 ENFORCING RIGHT TO PAYMENT
14.4.1 Initial Due Diligence
14.4.2 Informal Resolutions and Workouts
14.4.2.1 Document all Agreements
14.4.2.2 Important Terms in Workout Agreements
14.4.3 Filing a Lawsuit
14.4.3.1 Whom to Sue
14.4.3.2 Where to File
14.4.3.2.1 Which County
14.4.3.2.2 Which Court
14.4.3.2.3 Common Causes of Action
14.4.4 Arbitration
14.5 ENFORCING A JUDGMENT
14.5.1 Locating Assets
14.5.2 Recording Judgment
14.5.3 Garnishments
14.5.4 Execution
14.6 RECOVERY ACTIONS
14.6.1 Fraudulent Transfers
14.6.2 Successor Liability
14.6.3 Piercing the Corporate Veil
CHAPTER FIFTEEN: Dispute Resolution
15.1 DISPUTE RESOLUTION
15.1.1 Mediation
15.2 LITIGATION, ARBITRATION OR OTHER ALTERNATIVE METHODS OF DISPUTE RESOLUTION
15.2.1 Litigation
15.2.2 Arbitration
CHAPTER SIXTEEN: Bankruptcy
16.1 INTRODUCTION TO BANKRUPTCY LAW AND PRACTICE
16.1.1 Types of Bankruptcy Cases
16.2 COMMENCEMENT OF CASE
16.2.1 Automatic Stay
16.2.1.1 General
16.2.1.2 Extent and Duration of Automatic Stay
16.2.2 Relief from Stay
16.2.3 Violation of Automatic Stay
16.2.4 Particular Examples/Exceptions
16.3 INITIAL CONSIDERATIONS UPON LEARNING OF A BANKRUPTCY FILING
16.3.1 Deadline to File Claim
16.3.2 Deadline to Object to Discharge
16.3.3 Reclamation Rights
16.4 THE CLAIMS PROCESS
16.4.1 DeTypes and Priority of Claims
16.5 FILING A CLAIM
16.5.1 Proof of Claim
16.5.2 Time to File
16.5.3 Claim Objections
16.5.4 Late Filed Claims
16.5.5 False Claims
16.5.6 Payment of Claims
16.6 ESTATE PROPERTY IN BANKRUPTCY
16.6.1 Use, Sale, or Lease of Estate Property
16.6.2 Executory Contracts and Unexpired Leases
