Construction Law

American Safety v. City of Olympia

By John Ahlers

American Safety v. City of Olympia case (see Attached Article) increases the contractor's burden in recovering valid claims for changes (due to design revisions, differing site conditions or owner directed upgrades) . Not only must the contractor strictly comply with the notice requirements, if the contractor believes that the owner has relaxed the notice requirements, the Supreme Court has ruled the only way the contractor can be sure that the written notice requirements have been waived is to get that waiver in writing. The effects of this decision are going to be far reaching and severe, increasing the costs to owners to perform construction work by increasing the paperwork burden and the level of acrimony on a project site. Generally, claim notices are not well received by project owners and as contractors become more astute and document cost increases on the job with claim notices, the paper wars will be fought, to the disadvantage of both the contractor and the owner. Here are a number of practical implications that this decision will have on both contractors and owners:

Practical Considerations:

There are a number of implications that this decision will have on both contractors and owners.

Owners: Construction project owners, based on the American Safety decision will likely continue to bolster their contracts with specific provisions preventing any finding of implied waiver with provisions such as:

"The fact that the Owner and the Contractor may continue to discuss or negotiate a Claim that has or may have been defective or untimely under the Contract, shall not constitute a wavier of the provision of the Contract Documents unless the Owner and Contractor sign an explicit, unequivocal waiver approved by the Owner."

The Owners can also be expected to send contractors who submit a written claim a document that says the Owner is not waiving any written notice requirements, and that no waiver of the claim provisions can be construed from their actions.

Contractors: In light of the MMJ and American Safety cases, to preserve construction claims, the best advice for contractors remains to follow the contract's written notice requirements to the letter. Overcome the notion that providing written notification when changes occur will spoil the working relationship with the owner or face forfeiture of valid claims

Full post as published by Construction Law Blog on January 09, 2008 (boomark / email).