Nuts & Bolts | Construction Law Blog

Due to coronavirus concerns, owners and higher-tier contracting parties may be considering pausing work on a project until the impacts of the virus are better known and under control. Suspension clauses typically confer upon one party a unilateral right to suspend contract performance (usually for a certain period of time) without materially breaching the contract.

Before issuing such a suspension directive, however, a party should take care to read and understand its contractual rights and obligations under the contractual suspension clause. Specifically, the party ordering the suspension should understand what additional amounts may be owed under the contract if that party chooses to suspend performance of the work and should be aware of at what point, if any, the other party would be legally justified in terminating the contract. Some suspension of work clauses allow termination of the contract after a prescribed period of suspension of the work. Note also that if the contract does not contain a suspension clause, the owner that suspends work on the project may be putting itself in material breach of contract.

Rule 9 of the Construction Industry Arbitration Rules published by the American Arbitration Association (AAA) empowers the arbitrator to decide issues regarding the “existence, scope, or validity of the arbitration agreement” and “the existence or validity of a contract of which an arbitration clause forms a part.” This is referred to as a delegation clause. Delegation provisions can be found in various standard rules provided by the AAA and other arbitration administration organizations.

The author has practiced construction law for nearly 40 years and continues to be amazed or disappointed, as the case may be, by the frequency of one type of problem: Non-compliance with what are usually simple contract terms for giving notice of a claim for additional compensation, damages or time.

Last year, the Federal Aviation Administration (FAA) codified regulations governing the operation of unmanned small aircrafts or drones. The regulations, which took effect August 29, 2016, are 23 pages long as published on the federal register online, and the FAA commentary is even longer. Highlights are as follows:

Effective Aug. 28, 2017, public entities in Missouri will no longer be permitted to require a project labor agreement (PLA) on a public works project. A PLA typically is signed by the contractor, subcontractor and trade labor unions and sets forth the terms and conditions affecting the employment of labor on a construction project covered by that agreement, including the requirement to utilize labor furnished by the signatory trade unions.

Many legal battles in the construction industry revolve around contract interpretation disputes. Care in contract drafting is a valuable way to avoid disputes.

A fundamental principle of contract interpretation is to ascertain and give effect to the parties’ objectively expressed intent. What a party was trying to say, without accurately expressing it, does not count. Contract terms are usually given their ordinary (i.e., dictionary) meaning unless the contract specially defines them or the industry has adopted a special meaning known to both parties.