Construction contracts and claims

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Anyone monitoring construction industry trends is aware that the prices of raw construction materials, particularly steel and lumber, have been rapidly increasing since early 2020. Earlier this year, Associated Builders and Contractors reported that iron and steel prices were up 15.6 percent from January of 2020 to January of 2021, and that softwood lumber prices had increased by as much as 73 percent during the same period.

The reasons for these price increases are varied (ranging from supply chain and shipping disruptions to the increased demand for new home construction), and many have their roots in changes introduced to the global economy by the COVID-19 pandemic. Regardless of the explanations for the price increases, the reality is that builders and owners are more frequently facing busted budgets and difficult conversations, sometimes resulting in litigation, about which party is responsible for absorbing the increased costs. As is often the case, the answer to resolving these disputes likely lies in the particular provisions of the contract for construction.

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Continue Reading Revisiting Price Escalation Clauses in a Time of Skyrocketing Material Costs

Below is an excerpt of an article published in Construction Executive on April 15, 2021.

Modular construction is literally on the rise. It is rapidly displacing traditional stick-built construction for new commercial, industrial and residential buildings. Over the past decade, an increasing number of health care, education facilities and apartment buildings have been built using…

Below is an excerpt of an article published in the Spring 2021 edition of Under Construction, a  newsletter publication of the American Bar Association Forum on Construction Law.

As the construction industry recovers from and adjusts to the effects of the COVID-19 pandemic and prepares for a new normal, post-COVID world, claims for losses of

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Below is an excerpt of an article published in Healthcare Facilities Today on January 11, 2021.

“The current health crisis has healthcare institutions altering their approach to facility design and construction. Equity investors and contractors are also ready to familiarize themselves with healthcare construction. While opportunities abound, certain legal considerations are of paramount importance for…

In a recent decision likely to have a significant impact upon the way private construction projects in Massachusetts are managed, the Superior Court recently construed the Massachusetts Prompt Pay Statute in the way the Statute (Statute) was meant to be enforced, but contrary to most current construction practice.

In Tocci Building Corp. v. IRIV Partners…

Below in an excerpt from an article published in Construction Executive on December 8, 2020. 

The global COVID-19 pandemic has changed the world forever, disrupting many industries, as well as creating unprecedented challenges that threaten many businesses. The construction industry is no different. Projects throughout the country have been adversely affected by unplanned work stoppages,…

Passed in 2010, the Massachusetts Prompt Pay Statute imposed specific requirements on owners, contractors and subcontractors of private projects over $3M with regard to submitting, processing and approving requests for payment and change orders.  A recent decision by the Massachusetts Superior Court entitled, Tocci v. IRIV Partners, LLC, et. al. has confirmed that…

Pacta sunt servanda, i.e., agreements must be kept. This applies in both good economies and bad.

Companies considering a modification of their business operations to offset lower revenue must be mindful of existing commercial contracts. Implicit in almost every New York agreement is a covenant of good faith and fair dealing in the course of performance. Output and requirements contracts are an exception, however. With an output contract, the parties agree that the seller will sell all the goods or services it may produce to a buyer in exchange for the buyer’s agreement to purchase them. A requirements contract obligates the buyer to purchase what it needs or requires from a seller in exchange for the seller’s promise to supply the buyer.

Where an agreement is neither an output nor a requirements contract, then both parties have continuing obligations throughout the term. The defenses of “impossibility” and “frustration of purpose” excuse performance in only the rarest of circumstances. What may seem like an obvious obstacle may not meet the threshold. A company that fails to understand the nature of its agreement or is unfamiliar with the applicable case law is exposed to significant monetary penalties. As a leading New York case has made clear, this counts for real estate development and hotel contracts as well.…
Continue Reading Repurposing Real Estate Development to Counter Weakened Demand: Know the Risks Before Terminating Contracts

Changes are made to the scope of work on construction projects every day. In some cases, the contract party being asked to accept these changes is reluctant to do so, viewing the changes to be so substantial as to result in a scope of work radically and materially different than what it originally agreed to perform. Faced with these circumstances, the decision to refuse to perform the extra work and walk away from the project can be a tempting one.

The “cardinal change doctrine” is a tool available to address these situations. The doctrine provides that, when changes are made to a contract which are so disproportionate to the original scope of a contractor’s work that they constitute an abandonment of the original agreement by the other party, the contractor is relieved of further performance obligations.…
Continue Reading Connecticut Appellate Court Recognizes Cardinal Change Doctrine for the First Time

As the coronavirus/COVID-19 pandemic continues to spread and the governmental and private sectors formulate their responses, it has become apparent that the associated economic impacts will be significant and affect all sectors of the economy, including construction. Robinson+Cole’s Construction Group has been monitoring these developments and is already seeing preliminary notices being sent out by…