When playing a game of cards, how do you handle the “house” rules? You know, those unique ways of playing the game that may differ from those to which you are accustomed. Do you handle those nuances as they come up or before starting the game?
Contractors can often address similar issues before problems arise by deciding which rules will apply with a choice of law clause in their contracts.
Suppose you’re a contractor installing 55 miles of pipeline across three different states (PA, WV, & VA). If (when) a dispute arises, you’d like to resolve it with some consistency and predictability. So, before beginning work, you and the owner agree that no matter the state or the section of pipeline where the problem(s) occurred, the dispute(s) will be resolved according to the laws of only one state.
Good Idea: Include a choice of law clause in your contract to promote consistency and predictability (while reducing potential costs and risk).
But, what if Pennsylvania law prohibits a choice of law other than Pennsylvania, which says that if the construction project is located in Pennsylvania then no other state’s law can apply regardless of the parties’ agreement. Sometimes, the law seemingly frustrates the parties’ agreement. Unless, the “house” decides its own rules apply because the parties agreed by their contract.
Better Idea: When including a choice of law clause in your contract, consider if existing laws may void your choice.
In this example, the owner and contractor agreed that Virginia law would apply to the entire pipeline project spanning across portions of Pennsylvania, West Virginia, and Virginia. Although a Pennsylvania Law prohibited the parties’ choice of Virginia law, a Federal Court located in Virginia decided the parties’ agreement governed. Perhaps the house preferred its own rules?
Owner Nonpayment is No Defense to Miller Act Claim
As if you needed confirmation that the Federal Miller Act is a powerful tool for unpaid subcontractors, this is it. Even when a Prime ordered and accepted the Sub’s work, but didn’t have to pay under the Subcontract, the Subcontractor still. . . .
Trust, but Verify
Rely at your own risk upon a Contracting Officer’s statements when statutes or contract provisions may conflict.
Payment for Verbal Changes When a Writing was “Required”
Even if your agreement can only be modified by a writing, you may still have a good argument to be paid for extra work.
Pirates and Arbitration
How does a pirate solve a dispute (besides walking the plank)?
Bases Covered?
Contractors, will your current insurance policy cover “your work” as a joint venture partner? The typical answer is NO.
Two Paths at the Same Time to the Same Place
“Two roads diverged in a wood, and . . .” the Prime Contractor had to take both roads at the same time to the same place.
Rules, Which Rules?
Good Idea: Include a choice of law clause in your contract to promote consistency and predictability (while reducing potential costs and risk).
Government Liability for Third-Party Delays
Generally, the Government is not responsible for delays caused by third parties, even other contractors at its own project site, unless the Government affirmatively indicates the site will be ready and available.
Keep a Pass-Thru Claim Burning, Don’t Extinguish Liability
Prime contractors, have you ever submitted a subcontractor’s claim to a public owner? Subcontractors, have you ever wanted to submit a claim against the government, but you had no contract with government?
