Most construction contracts include an “order of precedence” clause. The various contract documents are listed and the clause states that in the event of a conflict or discrepancy within the documents, the documents shall take precedence in the order listed. It is easy to view these clauses as dry boilerplate. In actual application, however, they can be significant.

The contract plans for a street improvement project depicted sidewalks to be constructed, but did not indicate pedestrian walkways or crossovers. Standard highway specifications, incorporated by reference into the contract, called for such pedestrian protections during construction. When a pedestrian was struck and killed, the order of precedence clause became crucial.

Another case also involved contract interpretation and safety responsibilities. An injured worker argued that the project architect, tasked with weekly monitoring of the construction site for contract compliance, should have detected and warned of an unsafe practice. Fortunately for the architect, the professional services agreement with the project owner spelled out what the architect was, and was not, responsible for monitoring.

The third case in this issue involves a contractor’s recovery under a termination for the convenience of the government clause. The federal government argued that the contractor’s breach of contract prior to termination barred any recovery of performance costs incurred before the effective date of termination. The contractor responded that the government should have terminated the contract for default if it wanted to hold the contractor responsible.

Project plans did not depict construction phase pedestrian safety measures, such as crossovers or walkways, even though standard specifications incorporated by reference into the contract called for such measures. This posed a conflict within the contract documents, which had to be resolved in accordance with the Order of Precedence clause.

An architect’s professional services agreement with a project owner defined the architect’s on-site responsibilities during construction. The agreement expressly disclaimed responsibility for safety practices. No extra-contractual duty was created simply by a design professional’s presence at a job site.

When the government terminates a contract for convenience, the government cannot argue that contractor recovery of performance costs is barred by the contractor’s prior breach of contract. The contractor, however, bears the burden of proving it actually incurred the claimed costs.

It is not unusual for project owners to furnish equipment or material for the contractor to use in a project. The motivation is usually financial. There is nothing improper about this practice so long as the use of the owner-furnished property is stipulated in the contract. However, if the equipment or material proves unsuitable for the project, the owner cannot hold the contractor responsible.

A federal appeals court addressed a situation in which an owner mandated the use of gravel stockpiled at the project site as the base for a paved parking lot. The owner designated a third-party materials testing company to evaluate the gravel. The company reported the gravel was suitable, and the contractor used the gravel. However, the pavement started to heave and crack as a result of inadequate drainage in the base, and the project owner sought to hold the contractor liable for breach of the contractual warranty.

The other case in this issue involves an equipment manufacturer that employed multiple licensed professional engineers at its production facility. A claimant alleged the manufacturer was practicing engineering.

A project owner mandated the use of material stockpiled on its site and designated a third-party testing company to evaluate the material for suitability. The owner could not hold the construction contractor responsible when the material proved unsuitable.

A firm that employs licensed professional engineers is not necessarily providing professional engineering services or engaging in the practice of engineering. Only evidence establishing the specific responsibilities of those employees can establish the practice of engineering.

“Substantial completion” is a significant project milestone that carries both legal and financial ramifications. Broadly defined as the point at which the project is fit for occupancy or its intended use by the owner, it is a factual determination that must be made in the field. Many contracts designate the project architect or project engineer as the final arbiter of substantial completion, but is certification of final completion really final and binding? Not necessarily.

A California court recently said the term, as used in a statute of limitation, established a statutory standard, not a contractual standard. The AIA contract documents designated the project architect as the certifier. Certificates could be considered as evidence of when substantial completion occurred, but only a judicial finder of fact could make the ultimate determination.

The second case in this issue involved a construction manager’s insurance coverage whose commercial general liability policy excluded coverage for “professional services.” While the CM’s responsibilities arguably involved a mix of professional and non-professional functions, a federal appeals court ruled that the insurer could deny coverage altogether for claims arising out of the CM’s performance.

The third case addressed a municipality’s withholding of public records—settlement agreements with polluters—pending conclusion of the bidding process for a water treatment facility. The Alabama Supreme Court ruled that concern about bid inflation justified the temporary withholding.

While an AIA construction contract form made the project architect the final arbiter of substantial completion, that certification could not alter the terms of a statute of limitation. The certification was merely evidence to be considered in applying the statute.

A construction manager’s commercial general liability insurance policy excluded professional services. Although some of the CM’s alleged shortcomings involved activities that might not be considered professional, the activities were interrelated with expressly excluded professional activities. The exclusion applied and the insurer had no duty to defend.