In any construction activity, delay can play an important role. This has to be factored in when you are preparing the construction contract. Always hire an experienced Orem Utah real estate lawyer to prepare your construction contract. At Ascent Law, we can help you with quiet title actions, boundary disputes, adverse possession, evictions, and more.
In a construction contract, there should be a clause on excusable delay. Delays in contract performance can be caused by a wide variety of factors, both excusable and unexcusable, resulting in either late completion or increased costs, or both. The Excusable Delays clause provides that, except for defaults of subcontractors at any tier, the contractor shall not be in default for any failure to perform the contract if the failure arises from causes beyond the control and without the fault or negligence of the contractor. Examples of such causes include acts of God or of the public enemy, acts of the government, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, and unusually severe weather. As to performance failures of subcontractors at any tier, the contractor shall not be in default if the cause of the failure was beyond the control and without the fault or negligence of either the prime contractor or the subcontractors. The delay is not excusable as to the prime contractor if the contracted supplies or services were obtainable from another source, or if the Contracting Officer ordered the contractor to obtain the supplies or services from another source and the contractor failed to comply reasonably with that order.
If the completion date was delayed by the inability of the contractor or his subcontractor to procure necessary materials, through a failure either to obtain timely commitments or to ascertain the availability of such materials prior to the submission of the bid, that is a matter for which relief cannot be granted even in equity. A prime contractor is excused from nonperformance or delays, to the extent that they render performance impossible, caused by defaults of subcontractors or suppliers if such defaults cannot be charged to the fault or negligence of the prime contractor, and it is immaterial whether or not the default of the subcontractor can be placed under one of the enumerated causes of excusability because such causes are illustrative and not exclusive.
The purpose of the article is to remove uncertainty and needless litigation by defining with more particularity the otherwise hazy area of unforeseeable events that might excuse nonperformance within the contract period and to protect the contractor from the unforeseeable. Contractors thus know they are not to be penalized for unexpected impediments to prompt performance, and since their bids can be based on the foreseeable and probable, rather than possible, hindrances.
A prudent contractor, in preparing bids for the commencement of work within a specified period and for the completion of the same within certain stipulated days thereafter, normally considers the weather conditions that ordinarily prevail during such season of the year at the site of the work. Inasmuch as weather conditions could adversely impact on the ability of a contractor, particularly a construction contractor, to perform, contractors are expected to include time in their bids or offers for foreseeable weather delays. However, notice of lost time due to adverse weather conditions is not the same as notice of an excusable delay due to unusually severe weather because the property owner has no information as to what was foreseeable by the contractor.
The term “unusually severe weather” does not include any and all weather that prevents work under the contract, but only means weather surpassing in severity the weather usually encountered or reasonably to be expected in the particular locality and during the same time of year involved in the contract. It must be weather that could not have been reasonably anticipated and that impeded performance over and above the amount that work would been impeded in a normal year. But the mere fact that the weather was cold enough to make performance of the work substantially more expensive than at other seasons of the year is not sufficient to substantiate an excusable delay, unless the contractor demonstrates that the weather was unusual.
ACTS OF GOD
Though rarely invoked as an excusable cause of delay, an act of God may occasion performance failures.
A contractor will not be automatically excused from performance merely because he establishes the existence of a strike. It must also be shown that the delay caused by the strike was beyond the control and without the fault or negligence of the contractor. He will not be excused where the strike resulted from his own unfair labor practices. Even if a contractor bears no initial fault for a particular cause of excusable delay, he must mitigate the effect of that delay. He cannot allow a possible cause of delay to develop, but must take such action as is reasonably available to him to prevent the delay. Therefore, if the strike involved a subcontractor or supplier, and if the contractor could have obtained the required supplies or materials from another source, but elected not to do so because of higher prices, he will normally not be excused. Similarly, the contractor will not be excused if he could not obtain the supplies delayed by the strike because he failed to place the order in a timely manner.
LACK OF ADEQUATE FINANCING
It is well settled that the contractor has the responsibility of either having adequate capital or having a reasonably established arrangement for obtaining the necessary capital required for contract performance at the time of contract execution. This does not mean that the contractor must have on hand the cash reserves to finance the entire cost of performance. Rather, the contractor must have available reasonable financial resources in the light of business customs and practices to finance the expected cost of production or performance.
Where the cause of the contractor’s inability to perform lies solely in a conspicuous undercapitalization of the corporation with relation to the obligation it undertakes under the contract, rather than deriving from a contingency beyond its control, such undercapitalization is not a circumstance beyond the contractor’s control as to be within the purview of any force majeure clause.
If the contractor’s financial condition was such that attempted performance of the contract would have rendered him hopelessly insolvent, or even an adjudicated bankrupt, he is not excused from the default in contract performance as a matter of law. Actual bankruptcy, or threat of the same, is no excuse for nonperformance under the Default article and does not relieve the contractor from liability for excess costs of reprocurement. Bankruptcy, insolvency, or undercapitalization cannot be considered as a cause for nonperformance beyond the control and without the fault of the contractor.
By definition, a constructive change arises from either the conduct or the fault of the property owner. Conduct, circumstances that compel the contractor to accomplish work not called for by the contract, instructions (oral and written), and acts or omissions by the property owner that are of such a nature that they are inferred as having the same effect as the issuance of a formal change order are construed as constructive changes. The doctrine is based on equitable tenets and recognizes that an informal requirement (i.e., one not formalized by the issuance of a change order) for the performance of additional work under a contract is substantially equivalent to a formal requirement and must therefore be governed by similar principles. Stated differently, any conduct by the property owner that is not a formal change order, but that has the effect of requiring performance different from that prescribed by the original terms of the contract is a constructive change.
When a property owner, by his conduct, causes a contractor to perform changed work, such conduct may form the basis for a claim by the contractor. If the property owner compels the contractor to perform work not required by the contract, his order to perform, even if oral, constitutes an authorized, but unilateral change in the work and entitles the contractor to an equitable adjustment in accordance with the Changes provision of the contract.
ELEMENTS OF A CONSTRUCTIVE CHANGE
The constructive change doctrine is made up of two elements: the “change” element and the ‘order’ element. To find the change element, actual performance must be examined to determine whether it went beyond the minimum standards demanded by the terms of the contract. The order element is also a necessary ingredient in the constructive change concept. To be compensable under the Changes clause, the change must be one that the property owner ordered the contractor to make. The property owner, by his words or deeds, must require the contractor to perform work that is not a necessary part of his contract. This is something that differs from the advice, comments, suggestions, and opinions that property owner frequently offers to a contractor’s employees. And this is especially so where the contract standards are broad prescriptions of the performance specification type that give the contractor a wide measure of discretion in designing and manufacturing the end item.
The cornerstone of the construction contract is the specification, with its applicable descriptive material, on which the basic issues of pricing, performance, and contract terms and conditions are founded. The objective of the specification is to establish (1) a description, or specification, of the supplies or services being acquired; (2) criteria for inspection and acceptance of the work; and (3) a base line for performance on which initial pricing and schedule are predicated. Obviously, the adequacy and clarity of the specification are of paramount importance to both parties.
A contractor is obligated to do what the plans and specifications direct him to do, and when he has done so in a good and workmanlike manner, he has discharged his responsibility under the contract. If the plans and specifications are deficient, or if they are inadequate or structurally wrong, it is the fault of the party preparing them and not of the contractor attempting to follow them. Where the contracts for supplies or services in accordance with specifications it has prepared, there is an implied warranty that if the specifications are followed, a satisfactory product will result. Accordingly, a contractor attempting to perform to defective specifications may be entitled to costs incurred in attempting to meet the requirements of the original specifications, as well as to costs resulting from mistakes in the plans.
It is a basic tenet of contract law that a contract must be read as a whole and in its entirety. It is equally elementary that meaning must, if at all possible, be given to the language employed in the contract and that the proper interpretation of a provision is a question of law. Technical words and words of art are given their technical meaning, unless the context or a usage that is applicable indicates a different meaning. One primary purpose of interpreting a contract in this manner is to ensure that no word is rejected, treated as a redundancy, or assumed to be meaningless if any meaning that is reasonable and consistent with the other parts of the contract can possibly be given to it. Moreover, an interpretation that gives a reasonable meaning to all parts of an instrument will be preferred to one that leaves a portion of it useless, inexplicable, inoperative, void, insignificant, meaningless, or superfluous; nor should any provision be construed as being in conflict with another, unless no reasonable interpretation is possible.
If some substantial provision of a property owner-drawn agreement is fairly susceptible of a certain construction and the contractor actually and reasonably so construes it in the course of bidding or performance, that is the interpretation that will be adopted–unless the parties’ intention is otherwise affirmatively revealed. This rule is fair to both the drafters and those who are required to accept or reject the contract so proffered without haggling. Although the potential contractor may have some duty to inquire about a major patent discrepancy, or an obvious omission, or a drastic conflict in provisions, he is not normally required (absent a clear warning in the contract) to seek clarification on any and all ambiguities, doubts, or possible differences in interpretation. The property owner, as the author, has to shoulder the major task of seeing that within the zone of reasonableness the words of the agreement communicate the proper notions–as well as the main risk of a failure to carry that responsibility. Always ensure that your construct contract is prepared by an experienced Orem Utah real estate lawyer.
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