CHAPTER 4: IMPLIED DUTIES AND OBLIGATIONS …€¦ · ChAPTER 4: ImPLIED DUTIES AnD OBLIGATIOnS In COnSTRUCTIOn COnTRACTS 4.01 Introduction Chapter Four includes instructions related

4.01 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .364.02 Covenant of Good Faith and Fair Dealing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .374.03 Duty to Cooperate and not to hinder Construction Work . . . . . . . . . . . . . . . .384.04 Duty to Disclose Important Information Regarding Construction Projects . . .414.05 Duty to Provide Accurate Information to Contractor . . . . . . . . . . . . . . . . . . . .434.06 Implied Warranty of Plans and Specifications . . . . . . . . . . . . . . . . . . . . . . . . .444.07 Warranty That Site Condition Are as Represented . . . . . . . . . . . . . . . . . . . . . .474.08 Duty to Provide necessary Items within Owner’s Control . . . . . . . . . . . . . . . .494.09 Warranty of Commercial Availability of materials, Products, and Equipment .504.10 Duty to Provide Access to the Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .534.11 Duty to Provide Adequate Supervision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .554.12 Duty to Perform in Contract in Good and Workmanlike manner . . . . . . . . . . .564.13 Industry Standards—Custom and Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . .574.14 Duty to Timely Review Contractor Submittals and Requests . . . . . . . . . . . . . .594.15 Duty to Coordinate Work of multiple Prime Contractors . . . . . . . . . . . . . . . . .604.16 Duty to make Timely Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .614.17 Duty to maintain Project Site in a Reasonably Safe Condition . . . . . . . . . . . . .624.18 Warranty That materials Provided by Owner Are Suitable . . . . . . . . . . . . . . . .634.19 Implied Warranty of Adequacy of Contract Time . . . . . . . . . . . . . . . . . . . . . . .644.20 Implied Duty of Contractor to Seek Clarification . . . . . . . . . . . . . . . . . . . . . . .65

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Chapter Four

Implied Duties and Obligations in Construction Contracts

Oliver Holmes

Beutler_MJI_20150519_11-07_FinalPass.indd 35 5/19/15 11:13 AM

ChAPTER 4: ImPLIED DUTIES AnD OBLIGATIOnS In COnSTRUCTIOn COnTRACTS

4.01 Introduction

Chapter Four includes instructions related to implied duties and obligations of parties to a typical construction contract. These duties and obligations do not appear in the express terms of the parties’ agreement but are imported into construction contracts by operation of law when required by the sub-stantive law governing the parties’ agreement. Such duties and obligations normally include the obligation of both parties to deal with each other fairly and in good faith, the owner’s duty to disclose information material to the contractor’s performance and not to hinder construction work, and the duty to provide accurate plans and specifications, as well as the owner’s warranty of commercial availability of construction materials. They also include the contractor’s implied obligation to comply with construction industry standards and customs, and duty to complete the project in a good and workmanlike manner.

The breach of these implied duties and obligations can provide the con-tractor with a remedy in the form of additional compensation and a defense to owner claims for construction delays or deficiencies in the work. Simi-larly, a breach of the implied duties and obligations of the contractor can provide the owner with a defense or an independent claim for damages.

It is important to note that not all jurisdictions require that every con-struction contract include the following set of implied duties and obligations. In addition, many jurisdictions differ on how and when they apply these duties. Frequently, apparent differences between jurisdictions on these implied duties are fact driven. Before using one of these instructions, you need to carefully consider the law in your jurisdiction and adapt the instruction accordingly. This chapter provides a number of instructions, but inclusion of an instruction in this chapter is not intended to be a rep-resentation that the instruction represents the law in all jurisdictions (or even in a majority of jurisdictions).

Model Jury InstruCtIons: ConstruCtIon lItIgAtIon, 2nd edItIon36


Finally, many of these implied terms can be modified or excluded by the express terms of the parties’ agreement or by the facts in a particular case. Consider express terms and actions of the parties in determining whether an implied duty exists and what the appropriate defenses are to a claim of implied duty.

4.02 Covenant of Good Faith and Fair Dealing

In addition to the express terms of the parties’ agreement, there is an implied promise of good faith and fair dealing in every contract. This means that each party agrees it will not unfairly interfere with the right of the other party to receive the benefits of the contract.

The plaintiff claims that the defendant violated its implied promise to act fairly and in good faith. To establish this claim, the plaintiff must prove all of the following:

(1) The plaintiff and the defendant entered into a contract.(2) The plaintiff did all, or substantially all, of the material things required by the contract (or was excused from having to do those things).(3) All conditions required for the defendant’s performance had occurred (or were excused).(4) The defendant unfairly interfered with the plaintiff’s right to receive the benefits of the contract.(5) The plaintiff was damaged by the defendant’s conduct.

Note that the implied promise of good faith and fair dealing cannot require a party to do something that is inconsistent with the express terms of the contract.

Comment“Every contract imposes upon each party a duty of good faith and fair deal-ing in its performance and its enforcement.” Restatement (Second) of Contracts § 205. The requirement of “good faith and fair dealing” was

37ImplIed dutIes And oblIgAtIons In constructIon contrActs


first introduced by the Uniform Commercial Code (UCC) for contracts relating to the sale of goods and is now recognized by most American jurisdictions. U.C.C. § 2-103(1)(b) (“‘Good faith’ in the case of a merchant means honesty in fact and the observance of reasonable commercial stan-dards of fair dealing in the trade”); Steven J. Burton, Breach of Contract and the Common-law Duty to Perform in Good Faith, 94 Harv. L. Rev. 369 (1980). It is commonly understood that one of the primary functions of this implied duty is to prevent one party from injuring the right of the other to receive the benefits of the agreement between them. New Plumbing Contractors Inc. v. Nationwide Mut. Ins. Co., 9 Cal. Rptr. 2d 469 (Ct. App. 1992); Onderdonk v. Presbyterian Homes of N.J., 85 N.J. 171, 182 (1981).

The express terms of a contract can preempt or define the scope of this duty by explicitly allowing conduct that would otherwise be a violation. See VTR Inc. v. Goodyear Tire & Rubber Co., 303 F. Supp. 773 (S.D.N.Y. 1969). Furthermore, the obligation derived from this rule cannot alter the express terms of the contract or deprive a party of its bargained-for rights. See Nat’l Westminster Bank N.J. v. Lomker, 649 A.2d 1328 (N.J. Super. Ct. App. Div. 1994), cert. denied, 663 A.2d 1361 (N.J. 1995).

The law of contracts does not require this principle to be applied to the process of contract negotiations, although remedies for bad-faith negotiations may be found in the law of torts or restitution, or within spe-cific statutory frameworks such as the National Labor Relations Act. See Restatement (Second) of Contracts § 205 cmt. c.

The principle spelled out here is announced in the Restatement (Sec-ond) of Contracts § 205 and augmented by definitions in U.C.C. §§ 1-201(19), 2-103(1)(b).

4.03 Duty to Cooperate and Not to Hinder Construction Work

The law holds that the owner has an implied duty not to obstruct, hinder, or delay the project. An owner breaches a contract when its actions unrea-sonably obstruct, hinder, or delay the contractor’s work.



The contractor claims that the owner breached the contract because its actions interfered with the contractor’s ability to perform the work. To establish this claim, the contractor must prove all of the following:

(1) The contractor and owner entered into a contract.(2) The contractor did all, or substantially all, of the material things required by the contract (or was excused from having to do those things).(3) All conditions required for the owner’s performance had occurred (or were excused).(4) The owner interfered with the contractor’s work in a way that was unreasonable.(5) The contractor was damaged by the owner’s conduct.

CommentBecause the spirit of contracting between an owner and a contractor recog-nizes that a contractor prices and schedules a construction project based on expedient progress of the work, an owner is found responsible for increased costs and time to complete the work if it unreasonably interferes with the contractor’s work. Unless contract language expressly provides that the contractor will be responsible to complete the work on time without regard to costs, delays, or impacts to the work, the contractor may recover additional relief or compensation for any delays or damages caused by any breach of this implied term. See U.S. ex rel. Williams Elec. Co. v. Metric Constructors, 480 S.E.2d 447 (S.C. 1997); Bignold v. King Cnty., 399 P.2d 611 (Wash. 1965).

“The contracting party impliedly obligates himself to cooperate in the per-formance of his contract and the law will not permit him to take advantage of an obstacle to performance which he has created or which lies within his power to remove.” Gulf M&O Ry. Co. v. Ill. Cent. Ry. Co., 128 F. Supp. 311, 324 (N.D. Ala. 1954), judgment aff’d, 225 F.2d 816 (5th Cir. 1955). “It is sufficiently obvious that a contract for the construction of a building, even in the absence of an express stipulation upon the subject, implies an essential condition that a site shall be furnished upon which the structure



may be erected.” See Guerini Stone Co. v. P.J. Carlin Constr. Co., 248 U.S. 334, 340 (1919).

A breach of the implied duty not to hinder or obstruct a subcontractor’s performance also occurred in Quaker Empire Construction Co. v. D.A. Col-lins Construction Co., 542 N.Y.S.2d 692 (1982), when the general contractor provided erroneous field measurements to a subcontractor and failed to perform timely preparation work necessary before the subcontractor could start its work. Due to these delays, the subcontractor recovered the extra expenses incurred for working in winter weather. These expenses would not have been incurred absent the contractor’s delays and the contractor’s insistence to work during winter (to avoid owner-assessed liquidated dam-ages). Additional cases in which the implied duty was breached include the following: Paliotta v. Dep’t of Transp., 750 A.2d 388 (Pa. Commw. Ct. 1999) (owner interfered with contractor’s planned method of construc-tion when it represented that utility poles would be removed to facilitate curb and gutter work—but this proved incorrect, prompting contractor to request pouring the curb gutters behind the utility poles, which was denied by the state, requiring the contractor to switch to more costly method of construction); Volentine & Littleton v. United States, 169 F. Supp. 263 (Ct. Cl. 1959) (interference caused when owner raised water level at jobsite by closing upstream dam); Lester N. Johnson Co. v. City of Spokane, 588 P.2d 1214 (Wash. Ct. App. 3d Div. 1978) (after heavy rains, owner’s pumping raw sewage into field uphill from jobsite was interference when sewage ran downhill into construction zone, causing delays); City of Seattle v. Dyad Constr. Inc., 565 P.2d 423, 434 (Wash. Ct. App. 1st Div. 1977) (“City arbi-trarily and without justification directed the manner and method of the contractor’s performance insofar as the installation of the sheet piling was concerned, and that the effect of this improper interference of the City was to materially increase the scope of the work required of the contractor and delay his operations in that regard.”).



4.04 Duty to Disclose Important Information Regarding Construction Projects

The law holds that the owner has a duty to furnish the contractor with all important information needed to prepare a bid or price for the work. The contractor claims it was harmed because the owner failed to disclose [or concealed] material information regarding [specify information]. To estab-lish this claim, the contractor must prove all of the following:

(1) The contractor submitted its bid or agreed to a price and schedule to perform the work without information regarding [specify missing information].(2) The information would have materially affected the contractor’s cost or time to complete the work.(3) The owner had the missing information.(4) The owner was aware that the contractor did not have it.(5) The missing information was not generally available to the con-tractor nor discoverable upon reasonable inquiry by the contractor.(6) The owner failed to provide the missing information to the contractor.(7) The contract documents or other information furnished by the owner did not put the contractor on notice to investigate further regarding the missing information.(8) The contractor was damaged by the o wner’s failure to disclose the missing information.

CommentWith regard to undisclosed information, there is liability only if the failure to disclose materially affected the cost of performance and actually and justifiably misled the contractor in bidding on the contract. Contractor does not have to prove the owner intentionally concealed the information. See L.A. Unified Sch. Dist. v. Great Am. Ins. Co., 234 P.3d 490 (Cal. 2010) (It is not necessary to show fraudulent intent to conceal). This instruction most frequently applies principally to public owners awarding fixed-price



construction contracts to contractors required to submit bids based on design specifications and information provided by the public owner.

An excellent discussion of this implied duty and corresponding cases is available at The Twelve Deadly Sins: An Owner’s Guide to Avoiding Lia-bility for Implied Obligations during the Construction of a Project, Steven B. Lesser & Daniel L. Wallach, 28 Constr. Law. 15 (Winter 2008). “In addition to disclosing all pertinent information to the contractor during the prebidding process, the owner has an implied duty during the actual performance of the project to furnish the contractor with material infor-mation that may have a bearing on the contractor’s work. . . . Id. (citing S. Cal. Edison v. United States, 58 Fed. Cl. 313 (2003); Manuel Bros. v. United States, 55 Fed. Cl. 8, 34 (2002); see generally 3 Philip L. Bruner & Patrick J. O’Connor Jr., Bruner & O’Connor on Construction Law § 9:92 (2006)). This implied obligation typically arises when the owner has supe-rior knowledge not available to a contractor from other sources.” Id. (citing Sergent Mech. Sys. Inc. v. United States, 34 Fed. Cl. 505, 519 (1995); Am. Ship Bldg. Co. v. United States, 654 F.2d 75, 79 (Ct. Cl. 1981); Hardeman-Monier-Hutcherson v. United States, 198 Ct. Cl. 472, 487 (1972); Helene Curtis Indus. Inc. v. United States, 160 Ct. Cl. 437, 444 (1963)).

An owner’s failure to make appropriate disclosure may entitle the con-tractor to damages or an equitable adjustment. For example, in Helene Curtis Industries Inc. v. United States, 312 F.2d 774 (Ct. Cl. 1963), the owner was aware that the contractor assumed it could perform the con-tract without utilizing a grinding process. The owner was liable when it failed so to inform the contractor. Similarly, in City of Indianapolis v. Twin Lakes Enterprises Inc., 568 N.E.2d 1073, 1080 (Ind. Ct. App. 1991), the owner breached its implied duty of disclosure when it insisted that a con-tractor continue to dredge a reservoir that the owner knew contained large obstructions previously dumped in that area by the owner; See also S. Stein, Construction L. (MB) ¶ 18.02 (1994); 3 Bruner & O’Connor on Con-struction Law § 9:92.



4.05 Duty to Provide Accurate Information to Contractor

The law holds that when an owner provides a contractor with information to prepare a bid or perform a construction contract, the owner is respon-sible if the information is not accurate.

The contractor claims the owner provided [specify inaccurate information] regarding [specify type of inaccurate information provided]. The contractor now seeks damages because it claims that information was not accurate. To establish this claim, the contractor must prove all of the following:

(1) The owner provided [specify inaccurate information] to the contractor.(2) The contractor relied on this information.(3) The information was not accurate.(4) The contractor’s reliance on that information had a material affect on the contractor’s work.

CommentThis duty extends to information related to site conditions. See Wendward Corp. v. Group Design Inc., 428 A.2d 57, 59 (Me. 1981) (owner’s agent took soil samples at wrong location; as a result, the true subsurface conditions of the actual site were not revealed until construction of the foundation was already in progress).

In one noteworthy case, the City of Los Angeles provided bidders on a retaining wall construction project with the logs of two test borings it had conducted at the jobsite; the logs erroneously reported the soil composi-tion obtained from the borings. Warner Constr. Corp. v. City of L.A., 2 Cal. 3d 285, 293–94 (1970). Attached to the logs was a caveat disclaiming any warranty that the test hole information was indicative of conditions elsewhere at the site. The City, however, knew, but did not disclose, that cave-ins had occurred in both test holes, forcing it “to change its drilling methods and to abandon the holes before reaching the planned depth of 50 feet.” Id. When caving occurred in holes that were drilled during construc-tion, and the contractor was forced to change to a more expensive drilling technique with rotary mud, the City was liable for its nondisclosure of the



earlier cave-ins and use of special drilling techniques. The nondisclosure “transformed the logs into misleading half-truths.” Id.

This duty can be modified by express contract terms or direction from the owner that information provided is not to be relied upon but is pro-vided solely for information and reference.

4.06 Implied Warranty of Plans and Specifications

The law holds that a contractor is entitled to rely on the plans and specifi-cations provided by the owner.

The owner’s responsibility to provide accurate plans and specifications is not overcome by general clauses in the contract requiring the contractor to visit the site, check the plans, and/or inform himself of the requirements of the work. If the specifications are faulty and unreasonably delay com-pletion, a breach of contract results entitling the contractor to additional compensation.

If you find that the contractor followed the plans and specifications pre-pared by the owner and was not negligent in doing so, you should not find the contractor liable for any resulting deficiencies caused by the defective plans and specifications.

This rule, however, does not apply when the contractor does not follow the plans and specifications.

CommentThis rule was recognized as “well settled” in the landmark case of United States v. Spearin, 248 U.S. 132 (1918), and the language of the instruction generally mirrors the discussion found therein. If a contractor is misled by incorrect statements, plans, or specifications issued by the owner, the con-tractor may hold the owner liable for the additional amount of expense required to complete the project resulting from the inaccuracy within the contract documents. The idea is that “when an owner provides the con-tractor with plans and specifications, the owner is deemed to impliedly warrant that the contractor will be able to satisfactorily complete his con-tractual obligations by following the plans and specifications.” S. Stein,



Construction L. (MB) ¶ 18.02 (1994); see also Dundt Corp. v. Dep’t of Transp., 566 N.W.2d 476 (S.D. 1997); Neal & Co. v. United States, 19 Cl. Ct. 463 (1990), aff’d, 945 F.2d 385 (Fed. Cir. 1991) (where a flaw in the government’s design specification caused bowing of concrete and steel wall panels, court held that contractor was entitled to equitable adjustment of contract price); Fairbanks N. Star Borough v. Kandik Constr. Inc., 795 P.2d 793 (Alaska 1990), vacated in part on other grounds and remanded, 823 P.2d 632 (Alaska 1991); S&T Constr. Co. v. Harris, 789 P.2d 640 (Okla. Ct. App. 1990) (contractor was not liable for damages resulting from any defect, since construction was undertaken according to owner’s plans and specifications); Ne. Plate Glass Corp. v. Murray Walter Inc., 537 N.Y.S.2d 657 (App. Div. 3d Dep’t 1989) (where owner issued faulty plans and speci-fications, court held that subcontractor who installed window wall panels was not liable to owner for cost of replacement).

For example, a contractor was entitled to additional costs to correct case cemented joints because they met contract tolerance requirements even though unacceptable levels of failure arose. Because the failure was attribut-able to overbroad tolerance range, the owner was responsible for the failure. Appeals of Columbia Eng’g Corp., 89-2 B.C.A. (CCH) ¶ 21,689 (Feb. 13, 1989); REDM Corp. v. United States, 428 F.2d 1304 (Ct. Cl. 1970); Ithaca Gun Co. v. United States, 176 Ct. Cl. 437, 440 (1966). See also 6 A.L.R.3d 1394 (1966), which cites authorities from various jurisdictions that have adopted the implied warranty of design specifications. Even in the absence of fraud or negligence, the owner is required to reimburse the contractor for any increased costs caused by defects in the design. The exception for a contractor’s negligence or failure to follow the plans is stated in McGuire v. United Brotherhood of Carpenters and Joiners, 314 P.2d 439 (Wash. 1957). For other applications of the doctrine, see Wunderlich Contracting Co. v. United States, 351 F.2d 956 (Ct. Cl. 1965); Commonwealth Dep’t of Transp. v. W.P. Dickerson & Son Inc., 400 A.2d 930 (Pa. Commw. Ct. 1979); Val-ley Constr. Co. v. Lake Hills Sewer Dist., 410 P.2d 796 (Wash. 1965). See Mooney’s Inc. v. S.D. Dep’t of Transp., 482 N.W.2d 43 (S.D. 1992), which refers to an “implied warranty of accuracy” and states that “[t]his respon-sibility of the owner is not overcome by the usual clauses requiring builders



to visit the site, to check the plans, and to inform themselves of the require-ments of the work.”

Of course, the contractor must reasonably rely on and comply with the detailed design documents to be excused from responsibility for noncom-pliance. See Tyger Constr. Co. v. United States, 31 Fed. Cl. 177 (1994); Al Johnson Constr. Co. v. United States, 854 F.2d 467 (Fed. Cir. 1988). The deficiencies cannot be patent deficiencies that the contractor should have identified.

In addition, the implied warranty can be overriden by express warranties within a contract. For example, in Rhone Poulenc Rorer Pharmaceuticals v. Newman Glass Works, 112 F.3d 695 (3d Cir. 1997), it was held that, under Pennsylvania law, the subcontractor’s express warranties that the work would be “free from faults and defects” overrode the owner’s implied war-ranty of design under the Spearin doctrine because the parties had thereby explicitly allocated that risk to the subcontractor.

The implied warranty of the adequacy of the design documents extends from a contractor to a subcontractor even though the contractor merely passes on the design information from the owner. See APAC-Carolina v. Town of Allendale, 41 F.3d 157 (4th Cir. 1994).

Note: A minority of courts have identified situations in which no implied duty existed because the court determined the contractor is in just as good a position as the owner to discover deficiencies in the plans and specifica-tions. See, e.g., Lonergan v. San Antonio Loan & Trust Co., 104 S.W. 1061 (Tex. 1907); Town of Urania v. M.P. Dumesnil Constr. Co., 492 So. 2d 888 (La. Ct. App. 1986); Manzanares v. Am. Int’l Forest Prods. Inc., 389 So. 2d 1142 (La. Ct. App. 1980); J.E. Brenneman Co. v. Commonwealth, Dep’t of Transp., 424 A.2d 592 (1981); J.A. & W.A. Hess Inc. v. Hazle Twp., 305 A.2d 404 (1973); Cady v. E.I. DuPont de Nemours & Co., 437 F. Supp. 1030 (S.D. Tex. 1977); Ryan v. Morgan Spear Assoc. Inc., 546 S.W.2d 678 (Tex. Ct. App. 1977); Pinkerton & Laws Co. v. Roadway Express Inc., 650 F. Supp. 1138 (N.D. Ga. 1986); Fid. & Deposit Co. v. Sheboygan Falls, 713 F.2d 1261 (7th Cir. 1983); City of New Orleans v. Vicon Inc., 529 F. Supp. 1234 (E.D. La. 1982); Emerald Forest Util. Dist. v. Simonsen Constr. Co., 679 S.W.2d 51 (Tex. 1984).



4.07 Warranty That Site Conditions Are as Represented

In this case, the contractor contends that it is entitled to additional time/cost because it encountered conditions at the site that were different than represented by the owner. To prove this claim, the contractor must dem-onstrate the following:

(1) The plans and specifications made express representations regard-ing the physical condition at the jobsite.(2) The contractor relied on such representations.(3) The actual conditions were different than those represented.(4) The difference impacted the contractor’s work.

CommentThis is the second warranty flowing from the discussion in United States v. Spearin, 248 U.S. 132 (1918). The warranty is “that the natural condi-tion at the site exists as the owner states. This is known as the warranty of accuracy because the owner will be liable for any extra expenses to the contractor if the owner’s statements about the physical condition at the site are inaccurate for any reason.” S. Stein, Construction L. (MB) ¶ 18.02 (1994). For example, the government was responsible for additional costs incurred after four typhoons struck a project in a remote area in the Pacific because the government represented that the area was outside the normal typhoon zone. Chris Berg Inc. v. United States, 404 F.2d 364 (Ct. Cl. 1968); see also Hollerbach v. United States, 233 U.S. 165 (1914) (statement that dam was backed by stone, sawdust, and sediment was an implied warranty that such condition existed); Arcole Midwest Corp. v. United States, 113 F. Supp. 278 (Ct. Cl. 1953) (implied warranty that electrical power would be at the site breached).

Do note that the warranty is not extended to provide the contractor redress for site conditions that the owner did not represent or warranty. See Brown Bros. v. Metro. Gov’t, 877 S.W.2d 745 (Tenn. Ct. App. 1993) (an owner did not breach the warranty of accuracy where the owner’s estimate of rock to be removed was provided for the convenience of the contractor to be used solely at the contractor’s discretion, and the contractor did not



prove the owner’s negligence); cf. Green Constr. Co. v. Kan. Power & Light Co., 717 F. Supp. 738 (D. Kan. 1989), aff’d, 1 F.3d 1005 (10th Cir. 1993) (where the contract shifted the risk of unforeseen subsurface or soil condi-tions to the contractor, the court held that the contractor could not recover under an implied warranty theory for extra costs incurred due to exces-sive subsurface moisture); Pinkerton & Laws Co. v. Roadway Express Inc., 650 F. Supp. 1138 (N.D. Ga. 1986) (where the owner made no statements regarding the amount of moisture in the soil, and the contract provision suggested an intent to shift the risk of unexpected subsurface conditions to the contractor, the court held that the contractor was not entitled to recover against the owner on a theory of implied warranty when the required work was made more expensive as a result of unexpected soil moisture).

Note that this warranty does not extend to performance specifications. Under the theory of a performance specification, the contractor is know-ingly assuming the risk of determining any subsurface conditions that will be encountered. “The court also held that there was no implied warranty where the government only provided performance specifications. The fail-ure of the contractor to adequately inspect the site bore the risk of the site’s conditions.” Hardwick Bros. Co. II v. United States, 1998 U.S. App. LEXIS 20861 (Fed. Cir. Aug. 24, 1998). In a comprehensive opinion, the court held that Stuyvesant had not encountered a site condition different from that described in the contract because the contract did not indicate or describe the materials, or their characteristics, that Stuyvesant would find within the acceptable or prescribed prisms; that technical provision 4-1 was a perfor-mance specification that contained no warranty; that any ambiguity whether the contract language “since the channel was last dredged” referred to the last maintenance dredging in 1978 or to the 1981 emergency dredging, was patent, thereby requiring the contractor to inquire of the government; and in any event, that the meaning of those words was irrelevant to the claim because the time that had elapsed since the last dredging did not affect the difficulty of removing the material from the channel. Stuyvesant Dredging Co. v. United States, 11 Cl. Ct. 853, 859–62 (1987).



4.08 Duty to Provide Necessary Items within Owner’s Control

The law holds that the owner has a duty to provide items and approvals outside the contractor’s control that are necessary for the contractor to reasonably and timely perform its work. This includes obtaining required permits, easements, and regulatory approvals.

The contractor claims that that owner breached the contract by failing to [insert description of the owner’s alleged failure, such as failure to obtain necessary permit]. To establish this claim, the contractor must prove all of the following:

(1) The contractor could not reasonably or timely perform its work without [insert name for item, e.g., a building permit].(2) The owner knew or reasonably should have known that [a build-ing permit] was necessary for the contractor to reasonably and timely perform the work.(3) The owner had the ability to obtain [a building permit].(4) The contractor could not [e.g., obtain a permit] without the own-er’s assistance.(5) The owner failed to [obtain a permit] in a timely manner.(6) The owner’s failure impacted the contractor’s work.

CommentAn excellent discussion of this implied duty and corresponding cases is avail-able in The Twelve Deadly Sins: An Owner’s Guide to Avoiding Liability for Implied Obligations during the Construction of a Project, Steven B. Lesser & Daniel L. Wallach, 28 Constr. Law. 15 (Winter 2008). “Generally, the owner has an implied obligation to furnish whatever easements, permits, or other government approvals are reasonably required to enable construction to proceed.” Id. (citing COAC Inc. v. Kennedy Eng’rs, 136 Cal. Rptr. 890 (Ct. App. 1977) (water district owed implied contractual duty to contrac-tor building water treatment plant project to timely secure environmental impact report and all necessary permits); Nat Harrison Assocs. Inc. v. Gulf



States Utils. Co., 491 F.2d 578 (5th Cir. 1974) (owner liable to contractor for delay in securing right-of-way for transmission line project)).

Such terms are necessarily implied from the very nature of the contract, and the failure to comply with them constitutes a breach of contract by the owner. See Howard Contracting Inc. v. G.A. MacDonald Constr. Co., 71 Cal. App. 4th 38, 50 (1998); Felix Contracting Corp. v. Oakridge Land & Prop. Corp., 106 A.D.2d 488 (1984) (holding owner liable for delay in obtaining timely governmental approvals); see also Cal. Constr. L. Man-ual § 1:80 (6th ed. 2005) (citing cases).

Similarly, if the owner is delayed in securing appropriate access for per-formance of the work, the date for completion is to be extended accordingly. See, e.g., Maurice L. Bein Inc. v. Hous. Auth. of City of L.A., 321 P.2d 753 (Cal. Ct. App. 1958); D.A. Parrish & Sons v. Cnty. Sanitation Dist. No. 4 of Santa Clara Cnty., 174 Cal. App. 2d 406, 410 (Dist. Ct. App. 1959); McGuire & Hester v. City of S.F., 113 Cal. App. 2d 186, 187, 188 (Dist. Ct. App. 1952); see also 10 Cal. Real Est. § 27:36 (3d ed.) (citing cases). For example, in Lapp-Gifford Co. v. Muscoy Water Co., 134 P. 989 (Cal. 1913), where the contractor completed a job late because it could not obtain an easement over a railroad right-of-way, the law implied a covenant on the part of the owner that it either possessed or would procure the right-of-way. As a result, the owner was precluded from recovering any delay damages against the contractor. “In general, where plans, specifications and condi-tions of contract do not otherwise provide, there is an implied covenant that the owner of the project is required to furnish whatever easements, per-mits or other documentation are reasonably required for the construction to proceed in an orderly manner.” COAC Inc. v. Kennedy Eng’rs, 136 Cal. Rptr. 890 (Ct. App. 1977); see also S. Stein, Construction L. (MB) ¶ 18.02 (1994); 3 Bruner & O’Connor on Construction Law § 9:99.

4.09 Warranty of Commercial Availability of Materials, Products, and Equipment

When an owner specifies a single source for construction [materials, prod-ucts, or equipment], the law holds that the contractor is not responsible if



those materials or equipment are not (1) commercially available or (2) suit-able for the project.

The contractor claims it is not responsible for time and cost delays because the owner required it to obtain [insert name of material, product or equipment] from a single source, and the [material, product or equip-ment] was not commercially available from the specified source. To establish this claim, the contractor must prove all of the following:

(1) The contract specifications required the contractor to obtain [insert type of material, product, or equipment] from a single specified source.(2) The [material, product, or equipment] required by the contract was not commercially available from the single specified source.(3) The lack of availability impacted the contractor’s work.

CommentAerodex Inc. v. United States, 417 F.2d 1361 (Ct. Cl. 1969), is the semi-nal case on the issue. The doctrine holds that when the government puts out for bid a contract specifying the use of brand-name components, it is responsible when that brand later becomes unavailable on the commercial market. The warranty means that the sole-source supplier is capable of providing the specified product. Interstate Coatings Inc. v. United States, 7 Cl. Ct. 259, 261 (1985); Franklin E. Penny Co. v. United States, 524 F.2d 668, 674–75 (Ct. Cl. 1975); Cascade Elec. Co., ASBCA No. 28674, 84-1 B.C.A. (CCH) ¶ 17,210 (1984).

It is the obligation of the Government to ascertain and assure to bid-ders the commercial availability of the component [specified in the contract] from its manufacturer before it employs it as a purchase description or, failing that, to provide bidders with a sufficient descrip-tion of the physical specifications and performance characteristics so that it may be duplicated by the bidders either by in-house fabrica-tion or by purchase from suppliers. Here the Government did neither. It was improper for the Government to cast this burden of advance ascertainment upon bidders without explicit warning to them of the



questionable availability and physical makeup of the component. Aero-dex, 417 F.2d at 1366.

While the warranty of commercial availability shifts the risk of nonper-formance due to commercial unavailability from the contractor to the government, it does not relieve the contractor of any of the usual risks of nonperformance stemming from the contractor’s relationship with subcontractors.

“Designating a particular subcontractor in the contract between [the gov-ernment] and the prime contractor does not . . . shift the entire risk of the subcontractor’s non-performance, defective performance, or untimely per-formance to [the government]. The prime contractor bids on and enters the contract, knowing and accepting the designation of the subcontractor. In its subcontract it provides whatever measure of protection it thinks it needs.” See Gen. Ship Corp. v. United States, 634 F. Supp. 868, 869 (D. Mass. 1986).

This implied duty does not extend to the willingness of a supplier to provide the specified product “within the time period specified by the con-tract.” Franklin E. Penny Co., 524 F.2d at 675. Similarly, “the unexcused performance failure by a Government directed sole-source supplier does not relieve the contractor from its obligation to complete performance within the time period specified in the contract.” Cascade Elec. Co., 84-1 B.C.A. (CCH) ¶ 17,210, at 85,683. Nor does the warranty extend to “the terms and conditions insisted upon by a supplier,” Bogue Elec. Mfg. Co., ASBCA Nos. 25184, 29606, 86-2 B.C.A. (CCH) ¶ 18,925, at 95,480 (1986), or the price, Arnold M. Diamond Inc., ASBCA No. 22733, 78-2 B.C.A. (CCH) ¶ 13,447, at 65,720 (1978). Moreover, there is no warranty that the sole-source supplier will perform whatever subcontract it enters into with the contractor. Gen. Ship Corp. v. United States, 634 F. Supp. at 870; see also Paccon Inc. v. United States, 399 F.2d 162, 168 (Ct. Cl. 1968) (a warranty that would impose upon the government the burden of guaranteeing the performance of third parties without regard to any fault of its own is an unusual assumption of responsibility that “should not be inferred from ambiguous, inconclusive, or general discussions”).

It is a question of fact whether the single-source materials were commer-cially available. See Edward M. Crough Inc. v. Dep’t of Gen. Servs., 572



A.2d 457 (D.C. 1990) (exorbitant price of materials did not render them commercially unavailable). Other cases have also held that a project owner does not warrant that a specified proprietary product will be available in a timely manner, and that delay by a sole source supplier is not an excusable delay for the contractor. See Interstate Coatings Inc. v. United States, 7 Cl. Ct. 259 (1985); Appeal of Tri-State Constr. Co., ASBCA No. 23982, 81-1 B.C.A. (CCH) ¶ 14,962 (1981). Delays involving suppliers or materials required by the specifications may be excused “only if the prime contractor can and does establish that performance failures by its subcontractors or suppliers arose from unforeseeable causes beyond the control and without the fault or negligence of both the contractor and such subcontractors or suppliers.” Appeal of Cascade Elec. Co., ASBCA No. 28674, 84-1 B.C.A. (CCH) ¶ 17,210 (1984) (supplier that did not take lead times into account found to be negligent).

4.10 Duty to Provide Access to the Site

The law holds that when the owner enters into a construction contract with a contractor, the owner must provide the contractor reasonable access to the worksite. If the contractor is not able to access the worksite, the owner is responsible for additional costs and time associated with the access delay.

Here, the contractor claims that it is entitled to additional costs and time because it could not access the site as expected. To recover, the contractor must prove the following:

(1) The contractor and the owner entered into a contract.(2) The contract required the contractor to perform the work in a specified time or to start on a designated date.(3) The contractor could not start its work on the day anticipated.(4) The cause of the delay was the owner’s failure to provide the con-tractor reasonable access to the worksite.



CommentIt is well settled “that [a] contractor shall be permitted to proceed with his construction in accordance with the contract and that he shall be given possession of the premises to enable him to do so.” Hartford Elec. Appli-cators of Thermalux Inc. v. Alden, 363 A.2d 135 (Conn. 1975); Howard Contracting Inc. v. G.A. MacDonald Constr. Co., 83 Cal. Rptr. 590, 596 (Ct. App. 1998) (“[w]hen . . . access to the site is limited by the owner, the implied covenant is breached”); Harry Pepper & Assocs. Inc. v. Hardrives Co., 528 So. 2d 72 (Fla. Dist. Ct. App. 1988) (failure to make construction site available to commence work by an agreed date); Blinderman Constr. Co., 695 F.2d 552 (government owner breached its implied duty of coopera-tion by failing to assist the contractor in gaining access to family housing units owned by government); Walter Kidde Constructors Inc. v. State, 434 A.2d 962 (Conn. Super. Ct. 1981) (holding that owner breached contract by failing to provide timely site access due to occupation of site by another con-tractor under the owner’s control); Moorhead Constr. Co. v. City of Grand Forks, 508 F.2d 1008 (8th Cir. 1975) (owner had impliedly warranted site availability, which was denied when Phase I contractor was late in complet-ing its work); St. Paul Dredging Co. v. State, 107 N.W.2d 717 (Minn. 1961) (failure of utilities to clear site did not absolve owner of liability). But see J.F. Edwards Constr. Co. v. Illinois State Toll Highway Auth., 340 N.E.2d 572 (Ill. 1975) (when owner did not promise site by any particular date, contractor bore risk of unavailability). See also Bast Hatfield Inc. v. Joseph R. Wunderlich Inc., 78 A.D.3d 1270 (N.Y. 2010) (“By entering into a con-tract that required [the subcontractor] to comply with a schedule dependent upon [the owner’s] demolition, [the contractor] made an implied promise to [the subcontractor] that the demolition would be completed in time for [the subcontractor] to perform under the subcontract. We reject [the con-tractor’s] argument that [the subcontractor] assumed the risk of delay.”).

In addition to giving rise to a claim for damages, an owner’s failure to provide timely site access may constitute a material breach of contract that excuses the contractor’s continued performance. Hartford Elec. Applicators, 363 A.2d at 139–40 (“delay caused by an owner may constitute a breach excusing performance as required by the contract”); see also Douglas Nw. Inc. v. Bill O’Brien & Sons Constr. Inc., 828 P.2d 565 (Wash. Ct. App. Div.



1 1992); Capitol City Drywall Corp. v. C.G. Smith Constr. Co., 270 N.W.2d 608 (Iowa 1978); R.G. Pope Constr. Co. v. Guard Rail of Roanoke Inc., 244 S.E.2d 774 (1978); see 4A Bruner & O’Conner on Construction Law § 7:65.

4.11 Duty to Provide Adequate Supervision

The law holds that a contractor (or subcontractor) is required to provide adequate supervision for its construction project. The owner contends that [insert damage] was caused because the contractor failed to provide ade-quate supervision. To establish this claim, the owner must prove all of the following:

(1) The contractor failed to provide adequate supervision to the project.(2) The owner was damaged by the contractor’s failure to adequately supervise the work.

CommentA contract may imply a duty to provide sufficient supervisory personnel on the project. In Hill v. Polar Pantries, 219 S.C. 261, 271–72 (1951), the court stated: “It is true that there is no express stipulation to this effect but we think this obligation may be fairly implied. This was the interpreta-tion which the parties themselves placed upon the contract.” For example, in United States ex rel. Heller Electric Co. v. William Klingensmith Inc., 670 F.2d 1227 (D.C. Cir. 1981), a general contractor subcontracted with a masonry company to work on a parking structure. The project was not completed until almost a year after the expected completion date. Each party blamed the other for delaying completion, but the district court found that the general contractor failed to provide sufficient supervisory person-nel on the job, which resulted in the delayed completion. The U.S. Court of Appeals for the District of Columbia affirmed this aspect of the decision, stating “the prime contractor implicitly promises to provide such working conditions as may be necessary to allow its subcontractors to carry out its obligations under the contract.” Id. at 1232.



4.12 Duty to Perform Contract in a Good and Workmanlike Manner

The law holds that a contractor must perform construction work in a good and workmanlike manner. The owner contends the contractor failed to per-form the work for the [insert brief describe of work in dispute] competently [and/or] use the proper materials for the project. To establish this claim, the owner must prove all of the following:

(1) The contractor failed to perform its work competently and/or provide the proper materials.(2) The owner was damaged by the contractor’s failure.

CommentIn some jurisdictions, the contractor has an implied covenant that the work performed will be fit and proper for its intended use. See Kuitems v. Covell, 231 P.2d 552 (Cal. 1951). The implied covenant encompasses the quality of both the work and materials. See Aced v. Hobbs-Sesack Plumbing Co., 360 P.2d 897 (Cal. 1961); Alco Std. Corp. v. Westinghouse Elec. Corp., 426 S.E.2d 648 (Ga. 1992) (“a duty is implied in every service, repair or construction contract to perform it skillfully, carefully, diligently, and in a workmanlike manner”); Peterson v. Highland Crate Co-op, 23 So. 2d 716 (Fla. 1945) (“[t]here is an implied obligation on everyone who undertakes to perform a contract that it will be performed in a good, workmanlike manner”); Dawn Court Assocs. v. Cristia, 761 N.E.2d 705 (Ohio 2001) (“[i]n every contract for the future performance of construction services, an implied duty is imposed upon an independent contractor to perform services in a workmanlike manner”); Holden v. Placid Oil Co., 512 F. Supp. 644, 648 (E.D. La. 1981); Waterman S.S. Corp. v. Brady-Hamilton Stevedore Co., 243 F. Supp. 298 (D. Or. 1965); Bd. of Educ. v. Del Bianco & Assocs. Inc., 372 N.E.2d 953 (Ill. App. Ct. 1978); Gosselin v. Better Homes Inc., 256 A.2d 629, 639 (Me. 1969); Maville v. Donaghue, 193 Misc. 11 (N.Y. 1948); McCelland-Gentry Motor Co. v. Meyer, 222 P. 261 (Okla. 1923); Flintkote Co. v. Dravo Corp., 678 F.2d 942, 948 (11th Cir. 1982); Maloney Tank Mfg. Co. v. Mid-Continent Petroleum Corp., 49 F.2d 146, 149 (10th



Cir. 1931); Kubby v. Crescent Steel, 466 P.2d 753, 754 (Ariz. 1970); see also 2 Construction L. (MB) ¶ 5B.01[2][b]; 3 Bruner & O’Connor on Construction Law §§ 9:67–:70.

Note: There is significant divergence among jurisdictions on how this duty is treated and whether it applies to residential construction and/or commercial construction. Stanley P. Sklar, Edward L. Filer & Tina M. Bird, Implied Duties of Contractors: Wait a Minute, Where Is That in My Con-tract?, 21 Constr. Law. 11 (2001).

4.13 Industry Standards—Custom and Usage

The law holds that parties to a construction contract will perform as would normally be required according to industry customs, standards, or prac-tices. The plaintiff seeks damages because it contends that the defendant was required to [insert custom/practice] and it failed to do so. To prove this claim, the plaintiff must demonstrate the following:

(1) It is a commonly understood standard in the industry for a con-tractor to [insert custom/practice].(2) The express language of the contract did not modify this custom or practice.(3) The owner reasonably believed the contractor would follow this custom or practice.(4) The contractor failed to follow this custom or practice.(5) The owner was damaged.

As the jury, you are required to consider the evidence to determine what the reasonable customs and practices are in the construction industry. You may consider such evidence in deciding which interpretation of the con-tract is reasonable. However, general customs or standards in the industry do not override the express terms of the contract. The parties must still act under a reasonable interpretation of the contract, and if you find that the prevailing customs, standards, or practices in the industry do not comply with a reasonable interpretation of the contract, you may find that one



party breached the contract even if it acted in compliance with the customs, standards, or practices of the industry.

CommentEspecially in the context of an established industry with regular practices such as the construction industry, contractual language should be con-strued in accordance with its customary usage in the relevant community. See Restatement (Second) of Contracts § 219 (1979); see also Dar-win Constr. Co. v. United States, 31 Fed. Cl. 453 (1994) (ambiguity was to be construed in accordance with specialized trade usage). The rationale underlying this rule is the notion that the intent of the parties should be a touchstone of contractual interpretation. See W. States Constr. Co. v. United States, 26 Cl. Ct. 818 (1992); Indus. Elec.-Seattle Inc. v. Bosko, 410 P.2d 10 (Wash. 1966). Courts typically recognize that customary usage in the industry is probative of a party’s intent. See, e.g., id. However, “custom and usage cannot be invoked to create contract duties that did not previously exist or that are inconsistent with the contract.” Chas. H. Tompkins Co. v. Lumbermen’s Mut. Cas. Co., 732 F. Supp. 1368, 1374 (E.D. Va. 1990). Extrinsic evidence may be admissible only where it is necessary to show that a contractual term, vague on its face, actually has a special industry or trade meaning. See Graaff v. Bakker Bros. of Idaho Inc., 934 P.2d 1228 (Wash. Ct. App. 1997).

The qualification in this instruction is a recognition that, in certain cir-cumstances, the context of a usage within the contract may override the normal industry meaning. See W. States Constr. Co. v. United States, 26 Cl. Ct. 818; Cont’l Ins. Co. v. City of Virginia Beach, 908 F. Supp. 341 (E.D. Va. 1995). Thus, customary usage in the industry is not per se determinative. The remainder of the instruction is based on the Restatement (Second) of Contracts § 222 and accompanying comments and illustrations.



4.14 Duty to Timely Review Contractor Submittals and Requests

The law determines that if the owner requests the contractor to provide submittals or other information to the owner prior to performing the work, the owner owes the contractor a duty to timely review such information and respond to the contractor.

Here, the contractor seeks additional time/money because it contends that the owner failed to timely review submittals or requests. The contrac-tor must prove the following:

(1) The contractor gave the owner submittals or requests for information.(2) The owner was required to respond to this information or submittals.(3) The owner failed to respond to such information or submittals within a timely manner.(4) The contractor’s work was impacted by the delay.

Comment“Shop drawings” are drawings or illustrations prepared by the contractor that illustrate how specific portions of the work shall be fabricated and/or installed. Michael J. Bond, Rebuilding the Citadel of Privity, 30 Gon-zaga L. Rev. 221, 229 & n.57 (1994–95); see Horton Indus. Inc. v. Vill. of Moweaqua, 492 N.E.2d 220 (Ill. 1986) (while contractor took on risk of delays, it could recover because it did not assume the risk that owner and its engineer would be slow in responding to its inquiries); Sterling Milwrights Inc. v. United States, 26 Cl. Ct. 49 (1992) (government failed to meet obli-gations when it did not review shop drawings within five days as required); Ajax Paving Indus. Inc. v. Charlotte Cnty., 752 So. 2d 143 (Fla. Dist. Ct. App. 2000); Appeal of Cont’l Consol. Corp., 67-2 B.C.A. (CCH) ¶ 6624, 1967 WL 320 (Corps Eng’rs 1967), modified on reconsideration, 68-1 B.C.A. (CCH) ¶ 7003, 1968 WL 442 (Corps Eng’rs B.C.A. 1968) (untimely shop-drawing review entitled contractor to extension of time and money).



This implied duty also extends to change orders. See, e.g., Newberry Square Dev. Corp. v. S. Landmark Inc., 578 So. 2d 750 (Fla. Dist. Ct. App. 1991); Metro. Dade Cnty. v. Frank J. Rooney Inc., 627 So. 2d 1248 (Fla. Dist. Ct. App. 1993); J.A. Ross & Co. v. United States, 115 F. Supp. 187 (Ct. Cl. 1953) (contractor entitled to delay damages where government unreason-ably delayed in issuing a change order); J.D. Hedin Constr. Co. v. United States, 347 F.2d 235, 252 (Ct. Cl. 1965) (delay attributable to government did not end until change order was issued); Whitmeyer Bros. v. New York, 63 A.D.2d 103 (N.Y. 1978) (owner issued change orders in a disorderly manner); Wilner v. United States, 26 Ct. Cl. 260, 275 (1992) (delay attrib-utable to owner continued until change order was issued).

4.15 Duty to Coordinate Work of Multiple Prime Contractors

The law holds that when an owner directly hires more than one contractor to perform work at the same site, the owner is required to coordinate the work of the contractors so as to avoid delays.

The contractor claims that it is entitled to additional time/money because of delays caused by the other contractor. To recover against the owner, the contractor must demonstrate the following:

(1) The owner had a direct contract with another contractor.(2) The contractor’s work was delayed or interfered with by the work of the other contractor.(3) The owner did not take reasonable actions to coordinate the work of the two contractors.

The owner’s obligation to coordinate requires it to take reasonable actions to coordinate. If you find that the owner took reasonable actions to coor-dinate, then you may determine that the owner is not responsible to the contractor even if the other contractor impacted the contractor’s work.



CommentSee Paccon, Inc. v. United States, 399 F.2d 162, 168–70 (“court found it clear that the government had the obligation to do what it reasonably could to see that the second contractor complied with the schedule of priorities”); Websco Construction Corp. v. New York, 57 Misc. 2d 9 (Ct. Cl. 1966) (“the State had a duty to regulate and coordinate with reasonable diligence the activities of the several prime contractors for the simple reason, if no other, that no one else had the authority to so act”); J.F. Edwards Construction Co. v. Illinois State Toll Highway Authority, 34 Ill. App. 3d 929, 934 (1975) (under the express terms of its contract with each of the contractors, the district alone could withhold payments from, take over the work of, or terminate an offending contractor for the reasons specified in the contract; as such, its admitted implied obligation to take reasonable steps to avoid frustration of a contractor’s efforts by lengthy delays for which the con-tractor has no responsibility includes, under the multiple prime contractor situation here, the implied obligation reasonably to use its power under the terms of the contract to enforce the coordination of the contractors); Tribble & Stephens Co. v. Consolidated Services Inc., 744 S.W.2d 945 (Tex. App. San Antonio 1987), writ denied (July 6, 1988); 4A Bruner & O’Connor on Construction Law §§ 7:170, :198.

4.16 Duty to Make Timely Inspections

Under the law, when a contractor is required to seek inspections from the owner prior to performing additional work, the owner must perform the inspections in a timely manner so as to avoid delays to the contractor’s work.

Here, the contractor claims that it is entitled to additional time/money because the owner failed to make timely inspections required by the con-tract. The contractor must prove the following:

(1) The contract required the owner to make an inspection.(2) The contractor informed the owner it was ready for the inspection.(3) The owner failed to make the inspection within a reasonable time.



(4) The owner’s delay in making the inspection impacted the contrac-tor’s work.

CommentSee Miller v. City of Broken Arrow, Oklahoma, 660 F.2d 450 (10th Cir. 1981); State v. Buckner Construction Co., 704 S.W.2d 837 (Tex. App. Hous-ton 14th Dist. 1985), writ refused n.r.e. (Apr. 2, 1986); Adams v. United States, 358 F.2d 986 (Ct. Cl. 1966) (inspector rejected high number of items and withheld criteria for inspections); Kenneth Reed Construction Corp. v. United States, 475 F.2d 583 (Ct. Cl. 1973) (contractor entitled to equitable adjustment where government inspectors required tolerances not set forth in contract nor normally used in similar construction); Appeals of Sierra Blanca Inc., 90-2 B.C.A. (CCH) ¶ 22,846 (Armed Serv. B.C.A. 1990) (contractor entitled to delay damages for government’s arbitrary rejection of masonry block submittals); Russell R. Gannon Co. v. United States, 417 F.2d 1356 (Ct. Cl. 1969) (government breached obligation by failing to provide full-time inspection and requiring 72-hour notice of required inspections). See generally 4 Bruner & O’Connor on Construction Law § 13:40.

4.17 Duty to Maintain Project Site in a Reasonably Safe Condition

The law determines that a general contractor is required to maintain the site over which it has control in a reasonably safe condition. Here, the sub-contractor seeks to recover costs associated with [insert claim] because the subcontractor contends the contractor failed to maintain the project site in a reasonably safe condition. To recover on this claim, the subcontractor must prove the following:

(1) The contractor had control over the area of the worksite on which the incident occurred.(2) The contractor failed to take reasonable actions to maintain the project site in a reasonably safe condition.



(3) If the contractor had taken reasonable actions, the incident would not have occurred.(4) The subcontractor was damaged as a result of the incident.

The contractor’s obligation here does not automatically mean that the con-tractor is responsible for any accident or injury at the project site. Rather, the contractor is only required to take reasonable actions to maintain the project site in a reasonably safe condition. If you find that the contractor took reasonable actions regarding site safety, you should not find the con-tractor responsible even if the subcontractor was harmed.

CommentSee Bovis v. 7-Eleven Inc., 505 So. 2d 661, 664 & n.5 (Fla. Dist. Ct. App. 1987) (determining that a jury instruction that a general contractor had an implied duty to keep the jobsite in a reasonably safe condition was appro-priate when an operator of a hoist brought a claim for injury on the jobsite).

4.18 Warranty That Materials Provided by Owner Are Suitable

The law holds that if the owner provides materials or equipment to the contractor to use in the project, the owner is responsible if the materials or equipment are not suitable for the intended purpose.

Here, the contractor claims that it is entitled to additional time/cost because materials or equipment provided by the owner were not suitable for the intended purpose. To recover on such a claim, the contractor must demonstrate the following:

(1) The owner provided materials or equipment to the contractor to incorporate into the work.(2) The equipment or materials were not suitable for the intended purpose.(3) The contractor’s work was impacted because the materials or equip-ment did not function in the intended manner.



Comment“[I]f the owner provides the contractor with materials and equipment for use in work on the project, the owner impliedly warrants the suitability of the materials and equipment for their intended uses.” S. Stein, Construction L. (MB) ¶ 18.02[2] (1994). The warranty functions similar to the Spearin warranties related to site conditions. See, e.g., Structural Sys. Tech. Inc., 89-2 B.C.A. (CCH) ¶ 21,693 (1989).

4.19 Implied Warranty of Adequacy of Contract Time

The law holds that if the owner requires the contractor to complete the work within a specified time, it must be reasonably possible for the contractor to perform the work within the designated time period.

Here, the owner seeks damages from the contractor because the work finished late. The contractor defends that it is not responsible for delay dam-ages because it was not reasonably possible for the contractor to complete the work within the required time. To prove this defense, the contractor must demonstrate the following:

(1) The contract required the contractor to complete the work within a designated amount of time.(2) The owner knew or should have known that it was not reason-ably possible for the contractor to complete the work within the designated time.

CommentIn some jurisdictions, an owner has an implied warranty to the contrac-tor that work specified in the plans and specifications reasonably can be completed within the allotted contract time. Frank Briscoe Inc. v. Clark Co., 857 F.2d 606 (9th Cir. 1988) (owner breached warranty when a large number of owner changes and design deficiencies interfered with the con-tractor’s timely completion of the contract). But see Willamette Crushing Co. v. State by and Through Dep’t of Transp., 932 P.2d 1350 (Ariz. Ct. App.



1st Div. 1997) (contract completion date was performance specification and rejected implied warranty).

4.20 Implied Duty of Contractor to Seek Clarification

The law holds that the contractor has a duty to seek clarification from the owner when it becomes aware of a discrepancy, ambiguity, conflict, error, or omission in the contract documents.

The owner claims that the contractor is not entitled to damages arising from a [discrepancy/ambiguity/conflict/omission] in the contract docu-ments because the contractor should have identified the error before bidding.

The owner must demonstrate the following:

(1) The [discrepancy/ambiguity/conflict/omission] in the contract documents was an obvious discrepancy.(2) The contractor knew or should have know of the discrepancy.

The owner is not required to prove that the contractor actually was aware of the issue, just that the contractor reasonably should have been aware.

CommentThe contractor has an implied duty to seek clarification, prior to submitting a bid or price, of “obvious” discrepancies, ambiguities, conflicts, or omis-sions in the owner’s design or other contract documents. A contractor who fails to seek such clarification does so at its peril, and it cannot later claim extra compensation after the discrepancy is corrected. See Darwin Constr. Co. v. United States, 31 Fed. Cl. 453 (1994); H.B. Zachry Co. v. United States, 28 Fed. Cl. 77, 38 Cont. Cas. Fed. (CCH) ¶ 76,502 (1993), aff’d, 17 F.3d 1443 (Fed. Cir. 1994) (ambiguity regarding painting a steel roof deck was ruled to be sufficiently obvious to have required the contractor to have made inquiry prior to bidding); see also Seville Constr. Inc. v. United States, 35 Fed. Cl. 242, 40 Cont. Cas. Fed. (CCH) ¶ 76,909 (1996), aff’d, 108 F.3d 1395 (Fed. Cir. 1997); Cmty. Heating & Plumbing Co. v. Kelso, 987 F.2d 1575 (Fed. Cir. 1993).



This implied duty also is sometimes called the “patent ambiguity” doc-trine notwithstanding that it applies to all of the various types of obvious design discrepancies that may not involve a true ambiguity. Travelers Cas. & Sur. of Am. v. United States, 74 Fed. Cl. 75 (2006) (holding that a contrac-tor “cannot rely on the Spearin implied warranty, when it failed to inquire about a patent ambiguity”); Clearwater Constructors Inc. v. United States, 71 Fed. Cl. 25 (2006) (denying motion for summary judgment because of fact issues as to whether particular defects were latent or patent).

Factors to determine “obviousness” and corresponding cases are discussed in 3 Bruner & O’Connor on Construction Law § 9.64:

(1) the time available to the contractor for price estimation and prepa-ration; See Appeal of Arnell Const. Corp., 86-1 B.C.A. (CCH) ¶18550, 1985 WL 17121 (Gen. Services Admin. B.C.A. 1985).(2) the size of the product and quantity of bid documents; See D & L Const. Co. and Associates v. U. S., 185 Ct. Cl. 736, 402 F.2d 990 (1968).(3) the contractor’s expertise, experience and special knowledge of the technical field in which the discrepancy arises; See Appeal of Bridge Const. Corp., 71-1 B.C.A. (CCH) ¶8857, 1971 WL 992 (D.O.T. Cont. Adj. Bd. 1971); Ets-Hokin Corp. v. U.S., 190 Ct. Cl. 668, 420 F.2d 716 (1970).(4) the economic significance—dollar value—of the discrepancy within the context of the contract price; See Mountain Home Contractors v. U. S., 192 Ct. Cl. 16, 425 F.2d 1260 (1970), case dismissed, 193 Ct. Cl. 1079, 1970 WL 3622 (1970); Brezina Const. Co. v. U. S., 196 Ct. Cl. 29, 449 F.2d 372 (1971).(5) the basis for the price submission—bid (usually prepared under last-minute pressures) or negotiated (usually involving extended con-ferences with the owner and designers); See Consumers Ice Co. v. U.S., 201 Ct. Cl. 116, 475 F.2d 1161 (1973); J. W. Bateson Co. v. U. S., 196 Ct. Cl. 531, 450 F.2d 896 (1971).(6) owner or designer knowledge of the discrepancy and ease of clari-fication. See Gorn Corp. v. U. S., 191 Ct. Cl. 560, 424 F.2d 588 (1970).



Documents

CHAPTER 4: IMPLIED DUTIES AND OBLIGATIONS …€¦ · ChAPTER 4: ImPLIED DUTIES AnD OBLIGATIOnS In COnSTRUCTIOn COnTRACTS 4.01 Introduction Chapter Four includes instructions related