Boucher outlines essential legal concepts for construction organizations in The Voice – February 11, 2016
Saul Ewing
Description
â—â—â— Legal Risk Mitigation 101: Continued
3. Notice Requirements
All construction personnel must be intimately familiar with
the notice provisions in the prime contract that governs a
construction project. The failure to meet a notice deadline can
result in a waiver of important legal rights. Notice requirements
include, but are not limited to, claims, responses to Requests for
Information (RFIs), differing site conditions, and termination of the
contract.
Notice provisions usually work in days, not months. As a result, construction personnel should not sit back and hope that a problem “works itself out.” The risk of ruffling a few feathers with the notice of a potential claim pales in comparison to the risk of delaying notice and waiving potential legal remedies when a problem is not timely resolved. Importantly, the obligations relating to notice requirements are not limited to contractors; there also are many notice requirements for owners.
For example, an owner must timely respond to notices relating to claims, RFIs, change orders and the like. It is a common practice of Saul Ewing attorneys to provide their clients with a one page “cheat sheet” of all the contractual notice requirements—sometimes laminated! Practice Tip: At the outset of every project, a one-page chart should be prepared and distributed to all personnel providing all of the notice deadlines and requirements contained in the governing contract. This chart should also be laminated and posted in a conspicuous location on the project to remind all personnel of the tight notice deadlines.
It is also recommended to include “potential notice issues” as a discussion item during internal weekly job meetings to ensure that all notice requirements are met. 4. Unknown / Unforeseen Conditions The handling of unknown and/or unforeseen conditions can make or break a project. The conditions must carefully be disclosed, investigated, and addressed prior to and during the entire performance of a project.
At the contract drafting stage, the owner will look to shift all of the risk of unknown and unforeseen conditions to the contractor. Any astute contractor will not accept unlimited risk, and therefore a compromise likely will be reached on each project. However, defining, with great specificity, at the onset what constitutes known/unknown and foreseeable/unforeseen conditions is critically important to determining whether the contractor actually encounters unknown or unforeseen conditions on a project. These types of conditions may be covered by law as to who shall bear the risk.
Be careful that contractually you cover the risk even if you think the law is protective of your company. Applying the concepts discussed above, any resolution of unknown or unforeseen conditions will need to be documented, either by written agreement by both parties, or by a written notice of claim. 5. Certificates of Insurance While insurance issues typically are handled by insurance or risk management experts, there are areas of insurance that can arise during the day-to-day work on a project. For example, certificates of insurance often are exchanged and accepted by construction personnel as evidence of a contractor’s insurance, or as evidence of an owner’s or general contractor’s status as an “additional insured” on a general contractor or subcontractor’s insurance policy.
However, a certificate of insurance is not definitive evidence of an owner’s or general contractor’s status as an additional insured. It is important to understand that an insurance certificate does not provide a binding contract as between your company and the insurer. Certificates of insurance often contain incorrect representations regarding an owner’s or general contractor’s status as an additional insured. A certificate of insurance typically is prepared by an insurance agency, not the insurance company providing the insurance.
As a result, insurers are not bound by the terms stated in a certificate of insurance. In order to properly confirm that the insured has all contractually-required coverages (i.e., such as “additional insured” status for an owner or general contractor), there must be written confirmation from the insurer, or a review of the actual insurance policy, or its endorsements. Key words to identify include: additional insured endorsements, primary coverage endorsements, waivers of subrogation, and alternate employer endorsements. â— Doreen M.
Zankowski, Partner, and Gregory M. Boucher, Associate, are attorneys in the construction practice group of Saul Ewing, located in the firm’s Boston office. Their construction practice spans across the United States and the globe.
Attorneys Zankowski and Boucher can be available, at no charge, to provide on-site legal risk mitigation training upon request. 46 The VOICE â— WINTER 2016 .
Notice provisions usually work in days, not months. As a result, construction personnel should not sit back and hope that a problem “works itself out.” The risk of ruffling a few feathers with the notice of a potential claim pales in comparison to the risk of delaying notice and waiving potential legal remedies when a problem is not timely resolved. Importantly, the obligations relating to notice requirements are not limited to contractors; there also are many notice requirements for owners.
For example, an owner must timely respond to notices relating to claims, RFIs, change orders and the like. It is a common practice of Saul Ewing attorneys to provide their clients with a one page “cheat sheet” of all the contractual notice requirements—sometimes laminated! Practice Tip: At the outset of every project, a one-page chart should be prepared and distributed to all personnel providing all of the notice deadlines and requirements contained in the governing contract. This chart should also be laminated and posted in a conspicuous location on the project to remind all personnel of the tight notice deadlines.
It is also recommended to include “potential notice issues” as a discussion item during internal weekly job meetings to ensure that all notice requirements are met. 4. Unknown / Unforeseen Conditions The handling of unknown and/or unforeseen conditions can make or break a project. The conditions must carefully be disclosed, investigated, and addressed prior to and during the entire performance of a project.
At the contract drafting stage, the owner will look to shift all of the risk of unknown and unforeseen conditions to the contractor. Any astute contractor will not accept unlimited risk, and therefore a compromise likely will be reached on each project. However, defining, with great specificity, at the onset what constitutes known/unknown and foreseeable/unforeseen conditions is critically important to determining whether the contractor actually encounters unknown or unforeseen conditions on a project. These types of conditions may be covered by law as to who shall bear the risk.
Be careful that contractually you cover the risk even if you think the law is protective of your company. Applying the concepts discussed above, any resolution of unknown or unforeseen conditions will need to be documented, either by written agreement by both parties, or by a written notice of claim. 5. Certificates of Insurance While insurance issues typically are handled by insurance or risk management experts, there are areas of insurance that can arise during the day-to-day work on a project. For example, certificates of insurance often are exchanged and accepted by construction personnel as evidence of a contractor’s insurance, or as evidence of an owner’s or general contractor’s status as an “additional insured” on a general contractor or subcontractor’s insurance policy.
However, a certificate of insurance is not definitive evidence of an owner’s or general contractor’s status as an additional insured. It is important to understand that an insurance certificate does not provide a binding contract as between your company and the insurer. Certificates of insurance often contain incorrect representations regarding an owner’s or general contractor’s status as an additional insured. A certificate of insurance typically is prepared by an insurance agency, not the insurance company providing the insurance.
As a result, insurers are not bound by the terms stated in a certificate of insurance. In order to properly confirm that the insured has all contractually-required coverages (i.e., such as “additional insured” status for an owner or general contractor), there must be written confirmation from the insurer, or a review of the actual insurance policy, or its endorsements. Key words to identify include: additional insured endorsements, primary coverage endorsements, waivers of subrogation, and alternate employer endorsements. â— Doreen M.
Zankowski, Partner, and Gregory M. Boucher, Associate, are attorneys in the construction practice group of Saul Ewing, located in the firm’s Boston office. Their construction practice spans across the United States and the globe.
Attorneys Zankowski and Boucher can be available, at no charge, to provide on-site legal risk mitigation training upon request. 46 The VOICE â— WINTER 2016 .
