As we have noted in previous articles, the American Institute of Architects and the Engineers Joint Contract Documents Committee often address the same contractor requirement or construction process in a different way. Many school district construction projects in Ohio use documents authored by the Ohio School Facilities Commission. The General Conditions document in each set of documents includes the majority of the contract processes, obligations, and requirements. Owners and contractors alike need to be familiar with these processes and with the responsibilities and obligations assigned to each party by the construction contract. As documents are updated, changes may occur that no one notices.
Let’s look at the current versions of each of three General Conditions documents – the AIA Document A201-2007, General Conditions of the Contract for Construction, (“A201-2007”); the EJCDC C-700, 2002 edition, Standard General Conditions of the Construction Contract (“EJCDC C-700”); and the OSFC General Conditions, September 2008 edition (“OSFC GC-2008”).
Written notice is required at different times during the construction process. We discussed this topic at length in the January 2006 and February 2002 issues of BrickerConstructionLaw.com in articles titled, “What The EJCDC C-700 Requires For Notice” and “Notice: Inquiring Minds Want To Know-Navigating the Deep Waters of AIA General Conditions.”
The simplest and most widely accepted method of giving written notice is through personal delivery. The A201-2007 Section 13.3, the EJCDC C-700 Paragraph 17.01, and the OSFC GC-2008 Paragraph 22.214.171.124 all provide for personal delivery for delivery of notice. Another option for delivery of notice is by registered or certified mail to the party’s last known business address, with a return receipt to provide proof of delivery.
The A201-2007 now also permits delivery by courier service. The OSFC GC-2008 recognizes notice by fax and/or email as long as the original written notice is delivered by either personal delivery or by registered or certified mail, postage prepaid, within three (3) business days after the fax or email was sent.
The rights and remedies set forth in a construction contract are not exclusive. This means that both the owner and contractor retain rights and remedies outside the four corners of the contract. Both A201-2007 Section 13.4.1 and EJCDC C-700 Paragraph 17.03 recognize that the duties and obligations set forth in the contract are “in addition to” and not a “limitation of” those otherwise available. The parties to a construction contract retain many rights and remedies related to the project.
Tests and Inspections
Tests and inspections often represent important components of a construction project. Whether these tests or inspections apply to soil, concrete, plumbing, electrical, or the like, the contractor generally bears the burden of (a) notifying the architect (as well as the owner) that the specific aspect of the project is ready for inspection and/or testing, (b) coordinating any required inspection/testing, and (c) paying for such inspection/testing. The owner generally is required to pay for inspections/testing that did not become a requirement until after the bids were received or the contract awarded.
A201-2007 Sections 13.5.1 to 13.5.6, EJCDC C-700 Paragraph 13.03, and OSFC GC-2008 Paragraphs 2.10.1 to 2.10.5 address the specific rights and responsibilities of the parties in regard to tests and inspections. The contractor should remember that any required test or inspection should be accomplished in a timely manner so as not to delay the progress of the work.
The parties may agree to an interest rate for payments due and unpaid under the contract. If they do not agree, A201-2007 Section 13.6 establishes the interest rate as the rate governing the place where the project is located. In Ohio, the legal rate of interest is established by statute (see Ohio Revised Code Sections 1343.03 and 5703.47).
Statute of Limitations
A statute of limitations is a legal term for a law establishing time limits during which a lawsuit may be filed. If a lawsuit is not filed before the end of that time period, the party loses the right to do so. For the breach of a written agreement in Ohio (e.g., a construction contract), the limitation period is 15 years from the date on which the breach is discovered (see R.C. 2305.06) – unless the contract itself establishes another deadline.
The A201-1997 described three distinct periods when the statute of limitations began to run, depending on when the claim arose (i.e., before or after substantial completion). The A201-2007 simplifies this determination. New Section 13.7 simply states that all causes of action arising out of the construction contract shall be commenced “within the time specified by applicable law,” but places a maximum time limit of 10 years from the date of substantial completion. Because the EJCDC C-700 and OSFC GC-2008 GC are silent about a statute of limitations, the 15 year limitations period identified above likely governs these two construction contracts in Ohio.
Calculating time periods under the terms of a contract is not always easy. When a construction contract refers to a time period in a number of days, the calculation generally does not include the first day of that time period. Both the EJCDC C-700 Paragraph 17.02 and OSFC GC-2008 Paragraph 6.1 use this approach.
For example, if the contract refers to a notice being delivered 30 days after the start of construction, Day One is not the first day of construction. Instead, it is the first day after the start of construction. If the last day of a time period falls on a Saturday, Sunday, or legal holiday (i.e., government holidays), that day is not counted.
The next time you find yourself in a dispute and you refer to the contract, don’t forget to look at the often forgotten provisions that define the processes to be followed under the contract and the responsibilities and obligations of each party. In fact, at least one person within your organization should be familiar with the contract documents (including recent amendments or modifications) and be responsible to make sure all of the requirements are met by each party to the agreement. See next month’s contracts column for a look at two more contract provisions that can be important if there is a dispute or claim related to the project.