In the world of construction, the old legal saying “equity aids the vigilant, not those who slumber on their rights” rings true. A weary contractor risks more than an OSHA violation – when a contractor fails to protect its legal rights, it can wake up near the end of the project only to find that it has lost a substantial amount of money with little ability to recover.
From the moment a contractor is awarded a job, it should take the necessary steps to protect its rights. The goal is to be in a position that allows a contractor to act immediately and preserve its claims when a problem arises. This is an active, ongoing process, and the following tips will aid in that process.
Document, then Document Some More.
Lawyers love records. Contractors should too, and for the same reason. Active and organized record-keeping from the start of the project allows parties to reconstruct problem projects accurately years later. Standard and objective record-keeping, even when there are no visible problems, support a party’s credibility, and well-preserved records can offer a lot of leverage when issues do arise. A contractor should have its boots-on-the-ground representatives keep daily logs documenting weather, the amount of labor, costs, overtime, and equipment usage, among other things. Maintaining these records in the “ordinary course of business” has an added bonus—in court, business records are admissible as evidence and speak for themselves, under a special rule.
Recognize the Notice Requirements.
Most contracts contain specific provisions for providing parties up the chain with notice of claims. These often require a contractor to act within a certain period of days. A contractor who fails to comply with the time limits may inadvertently “waive” an otherwise legitimate claim. For this reason, a contractor should study the contract at the very onset and take note of what is required for notice. When an issue arises, a contractor should strictly comply with the notice provisions and provide formal, written notice of its issue. The more notices provided, the better protected the contractor.
Carve Out Releases.
Payments, change orders and contract modifications often come with releases. These releases are usually broad and apply to all claims that have accrued at the time of execution. When a contractor is presented with a release and knows of a claim, the contractor should specifically exclude the claim directly on the release. The contractor should also do this with every subsequent release, unless it intends to forego its claim.
A vigilant contractor is most likely to get paid. A contractor who suddenly finds itself in a problem project can become vigilant. Contractors need to act early to preserve their claims and to ultimately get the worm.
Christopher D. Carusone is a Partner in the Firm’s Harrisburg office, where he serves as Chair of the Government Law & Regulatory Affairs and Energy & Utilities Groups, as well as Co-Chair of the Internal Investigations Group.