Construction Law Outline PDF

**Construction Law Outline:** **Lesson 1:** **Owner:** 1. 2. 3. Hybrid Construction Contract: 1. Developer: 1. **General Contractor:** 1. 2. 3. 4. **How can the subcontractor impact the owner?** 1. 2. 3. 4. 5. **Owner's Representative:** 1. 2. **Construction Manag...

**Construction Law Outline:** **Lesson 1:** **Owner:** 1. 2. 3. Hybrid Construction Contract: 1. Developer: 1. **General Contractor:** 1. 2. 3. 4. **How can the subcontractor impact the owner?** 1. 2. 3. 4. 5. **Owner's Representative:** 1. 2. **Construction Manager:** 1. 2. 3. 4. 5. 6. 7. 8. **How might a construction manager and a general contractor be similiar?** 1. 2. 3. **How might a construction manager and general contractor be different?** 1. 2. 4. 5. 6. 7. **CM not at Risk:** 1. 2. 3. **At risk:** 1. **Sub contractors:** 1. **Materialman:** 1. **Design Team:** 1. 2. 3. **Insurance Company:** 1. 2. 3. 4. 5. **Surety Company:** - - - - Relevance to construction: - - - - Lenders: 1. 2. 3. **Project Delivery Systems:** **In the Design-Bid-Build method, the design and construction phases of a project are separate and handled by different entities. The project is typically broken down into three distinct phases:** - - - **Key Features:** - - - - **Advantages:** - - **Disadvantages:** - - - **Design Build:** 1. 2. 3. 4. 5. 6. 7. **Why are Design Build projects fraught?** 1. Delivery Systems: - - - - - - - - - - - - - - **What prime contractors does Wick's Law mandate in public bidding on jobs over 50k?** 1. Why? 1. 2. 3. Excavation: can get permits to do excavation and foundation permit before the designs are fully done. Do not need to have a real game plan for demolition, then demolition can be done before the plans. And need foundation drawings and don't need to know every detail of the roof. Can hire the demo contractor while the architect is working on the roofing and getting it done. IS THIS RISKY? 1\. Risky to rush things because then work can be shoddy, mistakes can be made. 2\. If you start before plans are done then will have more change orders 3\. You do not have the whole design in front of you, so you do not know exactly what will end up being built. **Turnkey:** 1. 2. 3. ### **Key Characteristics of a Turnkey Construction Project:** 1. - - 2. - - 3. - - 4. - - 5. - - - ### **Advantages of Turnkey Construction:** 1. - 2. - 3. - 4. - 5. - ### **Disadvantages of Turnkey Construction:** 1. - 2. - 3. - 4. - **Charlesbois v. Weller Associates:** 1. 2. 3. 4. 5. The Contracts Needed: 1. 2. 3. 4. 5. 6. **Lesson II - Getting the Job, Bidding, Mistakes in Bid, Letter of Intent, Minority Set Asides:** **Bidding:** **Overview of Public vs. Private Bidding:** 1. 2. **Private Work:** 1. 2. 3. 4. **Public work:** 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. **Why are we doing this?** 1. 2. **Rule:** Municipality may not waive a material irregularity ; May waive a mere technical irregularity - But they don't have to. 1. A municipality can only award to the lowest responsible responsive bidder. **Lecesse Bros Contracting v. Town Board of the Town of Williamson:\*\*** 1. 2. 3. 4. **In the Matter of Fischbach and Moore Incorporated v. The NYC Transit Authority: (1981)** 1. 2. 3. 4. **When can a municipality reject all bids?** 1. 2. **Challenging an award:** 1. 2. 3. 4. 5. **Mistakes in Bid:** 1. 2. 3. **What types of unilateral mistakes in a bid would and would not permit you to withdraw your bid?** 1. 2. 3. **Letter of Intent:** 1. 2. **Minority Set-Aside Programs:** **Construction business is a tough business.** 1. **Requisition:** A requisition in construction is a formal request for materials, supplies, or services needed for a construction project: - **Purpose** A requisition is a legal document that initiates the purchasing process and ensures that everyone involved holds up their end of the agreement. **Who creates it** A project manager or site personnel creates a requisition and sends it to the procurement department. **What it includes** A requisition includes the quantity, quality specifications, and delivery timeline for the requested items. **What it does** Once approved, the requisition is used to create a purchase order, which is then sent to the supplier. **Importance** Requisitions are important for ensuring that construction companies are efficient and profitable. They help to avoid missing payments and ensure that payments are received in a timely manner. **How to manage** Requisitions can be managed using paper copies or requisition computer software. **Set aside programs:** 1. 66 RCNY; Executive Law RC7 **MWBE:** 1. 2. 3. 4. 5. **DBE:** 1. **LBE:** 1. **SDVBE:** 1. **XBE:** 1. **Lesson III: Changes and Extra Work** **Does a construction contract need to be in writing?** 1. 2. **Extra work:** 1. 2. 3. 4. **Additional Work:** 1. It\'s important to classify work as either additional or extra before any work is performed. If a contractor performs work without a written change order, they are not entitled to be paid for the extra work. A change order is issued when the owner admits that extra work is required. If the owner refuses to issue a change order, the contractor can pursue a claim for extra work. **Cardinal Change:** Changes the essential purpose. So beyond the scope - that you can't even be ordered to do it. Contractor has the right to walk away from the contract. 1. 2. 3. 4. 5. **Graciano Corporation v. Lanmark: (Cardinal Change Case)** 1. 2. 3. 4. **Value Engineering:** How to do things more cost effectively. **Disputed / Protest Work:** 1. **Maross Construction v. Central New York Regional Transportation Authority: (1985)** 1. 2. 3. 4. **Maross Construction Case:** 1. 2. In a contract, can one party put into the contract that its own employee will act as the arbiter of all disputes that come up regarding the contract. If so, what is the argument for allowing that to happen? 1. 2. **Westinghouse Electric Corporation v. NYC Transit Authority:** 1. 2. 3. 4. **A.H.A. General Construction, Inc. v. NYCHA: (1998)** 1. 2. 3. **According to the contracts:** 1. 2. 3. 4. 5. - - **A.H.A. General Construction, Inc. v. NYCHA: (1998)** 1. 2. 3. 4. 5. **Exculpatory Clause:** 1. 2. 3. **Condition precedent clause:** 1. 2. 3. **Between an exculpatory clause and a condition precedent clause, which one is the tougher barrier to overcome?** 1. **ADR Clause:** 1. **Notice provisions are a key part of construction contracts and require parties to notify each other in certain circumstances.** 1. 2. 3. 4. 5. 6. **Methods of Payment:** 1. 2. 3. **Lesson IV: Getting Paid** **How to get paid?** 1. 2. 3. **Allowance** is a plug number for a specific part of the bid set by the owner. 1. **Substantial completion:** 1. **Progress payment**s are usually made on a percentage of completion basis. 1. 2. **Role of Architect work:** 1. 2. 3. 4. **Percentage of completion:** 1. **Requisition:** Application for payment 1. 2. 3. 4. **Milestones:** 1. Every contract will provide for retainage. **Retainage** is the amount of money that can be withheld until some later point in the job. 1. 2. 3. 4. 5. PAYMENTS AND COMPLETION: 1. 2. 3. 4. 5. 6. **Cost-plus contractor:** Alternative to Lump sum 1. 2. 3. 4. 5. 6. **General conditions:** type of cost; Shall mean the personnel, work and services provided by the Construction manager. **Guaranteed Maximum Price:** 1. 2. 3. 4. **What is the difference between Guaranteed Maximum Price and Lump Sum?** 1. 2. 3. **Time and Material:** 1. **Unit pricing:** 1. 2. 3. **Unbalanced bids:** 1. 2. 3. 4. 5. 6. 7. 8. **Contingencies:** 1. **Lien Waivers:** 1. **Joint Check:** 1. 2. **Lesson V:** **NY Prompt Payment Act:** **Highlights:** 1. 2. 3. 4. 5. 6. 7. **Three ways that the NY Prompt Payment (only private jobs) act helps out contractors:** 1. 2. 3. **Available Remedies:** 1. 2. 3. 4. 5. **The New York Prompt Payment Act (PPA) does not apply to the following:** 1. 2. 3. The PPA does apply to all other contracts, whether written or oral, that are entered into after January 2003 and are for the construction, reconstruction, alteration, maintenance, or demolition of any building, structure, or improvement. Certain Contract Clauses Void: 1. 2. 3. 4. 5. Role of Arbitrator: **II. Pay-If-Paid Clauses:** **What is a pay-if paid clause?** 1. **What is the two-part test for validating the "if-paid" clause?** 1. 2. **What are we trying to remedy?** 1. 2. 3. **What is a pay when paid clause?** 1. **West-Fair Electric Contractors v. Aetna Casualty & Surety Company:** 1. 2. 3. 4. 5. 6. What clever argument convinced the court to decide the pay if paid clause was not good? 1. **III. Backcharges:** **Right to Withhold:** 1. **Liquidated Damages:** 1. 2. 3. 4. 5. **Can't have a penalty:** 1. **Lesson VI: Default and Termination** Any worker that has completed work has the right to file a mechanic's lien. **Why would a contractor want to terminate?** 1. 2. **Why wouldn't a contractor want to terminate?** 1. 2. 3. 4. **First Question with termination is to read the contract:** 1. 2. **For Cause: Sample Clauses** 1. 2. 3. 4. 5. 6. **Sample "Tough" Pro-Owner Termination Clause: Can terminate** 1. 2. 3. 4. 5. **Right to Cancel; Termination / Article 29:** 1. 2. **Consequences of terminating someone wrong:** 1. 2. 3. **Conversion Clause:** 1. 2. 3. 4. 5. **Is a conversion clause the evil clause that allows an owner to get out of their contract?** 1. **14.4.3:** In case of such termination for the Owner's convenience, the Owner shall pay the Contractor for Work properly executed; cost incurred by reason of the termination, including costs attributable to termination of Subcontracts; and the termination fee. **Termination for Convenience:** 1. 2. **Termination for Cause:** 1. **TERMINATED PARTY DEFENSE:** 1. 2. **Termination for Impossibility:** 1. **Two types of Termination:** 1. **Force Majeure Event:** 1. 2. 3. **Abandonment:** 1. **Betterment:** 1. 2. 3. What is the architect's get out of jail free card? What legal doctrine when faced with something it negligently left out of design? 1. 2. 3. 4. 5. 6. 7. **Lesson VII: Mechanic's Lien, Willful Exaggeration, Payment and Performance Bonds:** **Mechanic's Lien:** **What is a lien?** 1. 2. 3. **Why is it constitutional?** 1. 2. **Who can file it and for what?** 1. 2. 3. 4. 5. 6. 7. **BREACH OF K or LIEN? Which to do?** 1. 2. 3. 4. **When Can you file:** 1. **What good is it?** 1. 2. 3. 4. 5. Terminating Lien: 1. **Public Improvement is different:** 1. 2. 3. 4. 5. 6. 7. **How long is a lien good for?** 1. 2. No limits to how many tiers you can file in private. **How do you make a lien go away?** 1. 2. 3. 4. 5. 6. 7. Owner Lien Defenses: 1. 2. DISCHARGE A LIEN: FAILURE OF THE LIENOR TO FURNISH A VERIFIED STATEMENT OF LIEN: **TIMING:** 1. 2. 3. 4. OWNER HIT WITH LIENS: If you are the owner then you can move the process forward then you can serve 30-day notice on the lienor and say "within 30 days you need to file your foreclosure lawsuit" Owner wants to fight the lienor and challenges the lien. If have the wrong owner then the court will throw the lien out. If you are the owner and you realize that the owner's name on the lien filed against you is wrong then do not move to vacate the lien in court---better to sit on your hands and wait for the 8 months to expire and then **Defenses that you can use:** 1. 2. 3. Willful Exaggeration: 1. 2. **Morse v. Rentar Industrial Development:** 1. 2. 3. 4. 5. 6. **In the Matter of Paerdegat Boat and Racquet Club v. Electro-Thermal Systems Inc:** 1. 2. 3. **In the Matter of Paerdegat Boat v. Zarrelli:** 1. 2. 3. 4. 5. **Lesson VIII: Scheduling and Delay, Notice, Extensions of time, Exculpatory Clauses** I. **Why is time so important in construction?** 1. 2. 3. 4. 5. 6. **Significance of Time of the Essence:** 1. **Takeaway:** 1. 2. Notice provisions are often conditions precedent. Conditions provision is even more serious than the exculpatory clause. **What is the most important consequence of whether a clause is to be held a condition precedent vs. an exculpatory clause?** 1. **Notice Provisions as Traps:** 1. 2. 3. **When you are protecting the public fisc, you can't get the city to waive notice provision.** 1. **Don't want to be terminated for breach, so you have to lobby for extension of time.** 1. Any escape vials for notice provisions. **National States Electric Corp v. City of NY:** 1. 2. 3. 4. 5. 6. **No Damage for Delay:** **Kalisch Jarcho Inc v. City of NY: ( Gross Negligence Defense raised)** 1. 2. 3. 4. 5. 6. 7. 8. **Fed's Theory:** 1. 2. 3. 4. **Corinno Civetta v. City of New York: (No reasonable delays mentioned)** 1. 2. **Buckley & Company v. City of New York:** 1. 2. **Tutor Perini Corporation v. City of New York:** 1. **Bat Jac Contracting v. NYCHA:** 1. 2. 3. 4. **TJD Construction Co. Inc. v. The City of New York: (2002)** 1. 2. 3. 4. **WDF Inc v. Dormitory Authority of the State of NY:** 1. 2. 3. 4. **Atlantis Management Group v. Nare:** 1. 2. **What two part test does a liquidated damages clause have to satisfy to be valid and enforceable?** 1. **Excusable Delay:** 1. 2. **Non-excusable Delay:** 1. 2. 3. **Concurrent Delay:** 1. 2. 3. 4. 5. **Is the GC responsible to the sub for delays caused by the owner:** 1. 2. **Triangle Sheet Metal Works v. James H. Merritt and Co.** 1. 2. 3. **Liquidating Agreements:** 1. 2. 3. 4. **Bovis Lend Lease v. GCT Venture Inc.\*** 1. 2. 3. 4. **Lesson IX - Adjoining Properties , Lateral Support , License/Access Agreements, Fees:** **Duty of Lateral Support:** 1. Some acts you do with your land - You will be absolutely liable: 1. **In NYC, there is a ten foot rule:** 1. **Party Walls:** 1. 2. 3. **Lot Line window:** 1. **What if your building has a rooftop, can you continue to use pool if adjacent building is going up higher than u:** 1. **Underpinning:** 1. **Building Code section** 1. Extortion by the innocent neighbor against the avaricious neighbor. **Building needs a license from you: (developer needs this from you if you live in a adjacent building and may be impacted)** 1. 2. **In the Matter of Thomas Anthony Holdings LLC v. Goodbody:** 1. 2. 3. 4. 5. In a license agreement: 1. 2. 3. 4. **144 Barrow St. LLC v. The Bd. of Managers of 130 Barrow St. Condo:** 1. 2. 3. 4. 5. **Surat v. DHCR:** 1. 2. 3. **Lesson X: Dispute Resolution, Mediation, Arbitration, Litigation** I. - - - II. - - - **Mediation Tips:** - - - - **Non-judgmental:** 1. 2. 3. **III. Arbitration:** A. 1. 2. 3. - - 4. 5. 6. **How to start arbitration proceeding:** 1. 2. **Parties Set Some Rules:** 1. 2. 3. 4. **Arbitration vs. Litigation:** A. - - - - - - - **Baseball Arbitration:** 1. **Lesson XI - Insurance, Indemnity, Subcontractor Default** **Every Construction project includes insurance.** 1. A lot of contractors do not have insurance Need to provide a rider(endorsement), which agrees to cover someone else; Which is why it\'s called additional insured endorsement. **Insurance:** 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. **Premium Costs:** 1. 2. 3. 4. Occurrence is an outside force: **Insurance policy has two angles:** Want every tier of contractor to have insurance 1. 2. **Every insurance polic**y will provide for the cost of defense. **Michael Davis Construction Inc v. 129 Parsonage Lane:** 1. 2. 3.The Appellate Division affirmed the decision with some modifications: - - - - - Thus, the court modified the lower court\'s ruling by allowing the breach of warranty counterclaim to proceed but otherwise affirmed the dismissal of the other claims and the punitive damages demand. **Tapia v. Mario Genovesi & Sons, Inc: (Indemnification provision was applied)** 1. 2. 3. 4. 5. 6. 7. 8. **Zupko Painting v. Utica First Insurance Company:** 1. 2. 3. 4. 5. 6. Not just contractors, but also design teams that get insurance. **Indemnity:** 1. **General Obligations Law:** 1. **Claims Made vs. Occurrence Policies:** 1. **Other Types:** 1. 2. 3. 4. **II. Indemnification** **General Obligation Law Limitations:** 1. 2. 3. 4. 5. 6. **NY Gen Obligation §5-321 - §5-326** 1. 2. 3. 4. 5. 6. **Bonds:** 1. 2. 3. 4. 5. **Class 12: Causes of Action; Damages; Limitations of Liability; Waiver of Consequential Damages** Can waive time of the essence Breach of Contract: **Contractor's Damages for Breach:** 1. 2. **K Price - Amt. Paid - Cost to Complete:** 1. **Saxon Construction and Management v. Masterclean:** 1. 2. **Owner's Damages:** 1. **Quantum Meruit:** a reasonable sum of money to be paid for services rendered or work done when the amount due is not stipulated in a legally enforceable contract. 1. 2. 3. 4. 5. 6. **Strategies for Election in Quantum Meruit Claim:** 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. **Unjust Enrichment:** 1. 2. 3. 4. 5. **Fraud:** 1. 2. **Punitive Damages:** 1. 2. 3. One of the defenses for negligent delay is gross negligence. **Michael Davis Constr. v. 129 Parsonage Lane:** 1. 2. 3. 4. **Basic Limitation of Liability Clause:** 1. **Melodee Lane Lingerie Co. v. American District Telegraph:** 1. 2. 3. 4. ### **General Obligations Law Prohibitions:** #### **1. Landlords** Under New York's General Obligations Law, there are several protections that apply to tenants and landlords in rental agreements, particularly with regard to liability and enforcement clauses. Key provisions include: - - - - - #### **2. Architects, Engineers, and Surveyors** The General Obligations Law imposes restrictions on the liability of architects, engineers, and surveyors, particularly with regard to disclaiming responsibility for their work or limiting their liability. - - - #### **3. Garages and Parking Facilities** The GOL also limits the ability of property owners, especially operators of parking garages, to disclaim liability for damages caused by their own negligence. - - #### **4. Pools, Gyms, and Recreational Facilities** Contracts involving recreational facilities, like gyms and swimming pools, often attempt to disclaim liability for accidents that occur on the premises. - - #### **Walking Tour of Basic LOL Clause (Limitation of Liability)** - - - - - - #### **2. Limiting the Amount of Damages** - - - #### **3. Traditional Carve-Outs** In construction contracts, carve-out clauses often provide exceptions to limitations on liability, including: - - - - **Example of Carve-Out Clause**: - **Consequential Damages:** 1. 2. 3. **Kenford v. County of Erie:** 1. 2. **Consequential Damages Rule:** 3. 4. 5. 6. **BSF W. 175th St. Holding LLC v. New Founders Constr. LLC;** 1. 2. 3.