I promise that any disputes between us will be argued at your house. Time passes and a dispute begins to brew. Now, I want to argue at my house, not at yours. You pay costs to argue at my house that you wouldn’t have incurred had I done as agreed. Should I have to reimburse your costs?
A Federal Court in Northern California said yes – I have to pay your costs because I broke my promise.
During a project for the U.S. Navy in Djibouti for electrical and mechanical power-plant upgrades, a Subcontractor agreed that any disputes between it and the Prime Contractor would be resolved in a California Federal Court. The Prime is a U.S. company with its headquarters in California. The Sub is a Lebanese company with no regular presence in the U.S. In fact, it appears the Sub has never been to the U.S.
Recap: The dispute has nothing to do with anything near your headquarters/office/house, the Project is nowhere near your office, I’ve never been near your office, it’s probably more convenient for you to argue near your office, which is why you included this term in the Subcontract, and (most importantly) I agreed to only argue near your office.
Result: The argument will be near your office, not mine and not near the Project where we both worked and lived for many months. And, I now have pay your costs incurred because I tried to argue with you near the Project.
Prime Contractor Had No Duty to Help Surety Investigate Sub’s Default
We all know what happens when we “ASS-U-ME” something. So, we should all carefully avoid assuming things unnecessarily.
It’s Good to Be the King
Mel Brooks in the movie History of the World: Part I (1981) said it best – “It’s good to be the King.” It’s also true when asserting claims against the State or an arm or agent of the State.
Smoke Without Fire: Damage from Concrete Dust Covered by Insurance
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Changes Made After Substantial Completion Did Not Extend Overall Project Time
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One-Sided Construction Arbitration Clause Valid in Virginia
When it’s time to butt heads, know how the local turf (court) will interpret the clause.
Manage the Risk of Construction Changes
Almost any problem on a construction project can be traced to one of two things: changes or delays (even delays are really just changes). As in life, embrace and manage the change don’t run from it.
Want Your Profit? Prove a Constructive Change, Not a Suspension of Work.
What’s the Difference Between a Suspension of Work and a Constructive Change? For federal contractors, there are two main differences: . . .
No Special Defenses to Arbitration Agreements
Arbitration agreements, whether they are separate or part of a larger agreement, are contracts – an enforceable set of promises between parties. […]
How to Find (and Confirm) the Plain Meaning in a Contract
Contract formation confirms the parties understand and agree to all the essential terms. When that understanding and agreement fades, how do you […]
