Preface xv Acknowledgments xvii Chapter 1. Introduction.....................................1 Objective 1 Scope 1 How to Use This Book 3 Outline 4 Chapter 2. Basic Concepts...................................5 The Appellate Process 5 Fact-Sensitive 7 Hierarchy of Documents and Rules 8 Consistency 8 Equity 8 Reference 9 Chapter 3. What Is a Contract?..............................10 Formation Principles 11 Form 14 Exercise 3-1: Rosen & Morelli and Kreisler Borg 15 References 16 Additional Cases 16 Chapter 4. Fundamental Principles..........................17 Common-Law Rules 17 Procedural Interpretation Rules 17 v
vi Contents Operational Interpretation Rules 26 References 35 Chapter 5. Types of Changes and Disputes...................37 Identifying the Type of Dispute 37 Bilateral Change vs. Unilateral Change 38 Cardinal Changes 39 Minor Changes 39 Change Orders 39 Constructive Changes 41 Examples 42 Exercise 5-1: Diamond and the U.S. Assay Office 42 Exercise 5-2: Grand Forks and Moorhead Construction 45 Reference 48 Chapter 6. Notice Requirements............................49 Contract Language 49 Background 50 Rules of Application 53 Other Issues 63 Illustrative Example 67 Exercise 6-1: Granger Contracting and Chiappisi Brothers 70 Exercise 6-2: Linneman Construction and Montana-Dakota Utilities Co. 72 Exercise 6-3: Acchione & Canuso and PennDOT 74 Exercise 6-4: McKeny Construction and Rowlesburg, W.V. 75 Exercise 6-5: Northern Improvement Co. and South Dakota State Highway Commission 76 Exercise 6-6: Federico Co. and Commonwealth of Massachusetts 78 References 79 Additional Cases 80
vii Chapter 7. Extra Work and Oral Change Orders...............81 Contract Language 81 Background 82 Rules of Application 84 Other Issues 96 Illustrative Example 97 Exercise 7-1: Long and Lazer Construction Co. 101 Exercise 7-2: Henry s Electric Co. and Marilyn Apartments 102 Exercise 7-3: Laramee and Care Systems 103 Exercise 7-4: Owens Plumbing & Heating and Bartlett, Kans. 103 Exercise 7-5: Utah DOT and Thorn Construction Co. 104 Exercise 7-6: Security Painting Co. and PennDOT 105 References 106 Additional Cases 107 Chapter 8. Rules for Contract Interpretation.................108 Contract Language 108 Rules of Application 109 Rule against the Drafter 126 The Order-of-Precedence Clause 127 Illustrative Example 128 Exercise 8-1: Barash and New York 132 Exercise 8-2: Long and Lazer Construction Co. 133 Exercise 8-3: W. H. Armstrong & Co. and U.S. Government 134 Exercise 8-4: R. B. Wright Construction Co. and U.S. 135 Exercise 8-5: Lyon Metal Products and Kaiser Construction Co. 137 Exercise 8-6: Lancaster Area Sewer Authority and Environmental Utilities Corp. 139 Exercise 8-7: Metro Insulation Corp. and Boston Housing Authority 142 Exercise 8-8: Foothill Junior College District and Jasper Construction Co. 144
viii Contents Exercise 8-9: Western Contracting Corp. and Georgia State Highway Department 145 Exercise 8-10: Jacksonville State University, Dawson Construction Co., and Bob Roberts Co. 146 Exercise 8-11: Security Painting Co. and PennDOT 148 Exercise 8-12: D Annunzio Brothers and NJT 150 Exercise 8-13: Blake Construction Co. and U.S. Navy 151 Exercise 8-14: Farrell-Cheek Steel Co. and Forest Construction Co. 153 Exercise 8-15: Granger Contracting Co. and Chiappisi Brothers 153 Exercise 8-16: J. A. Jones Construction Co. and U.S. Army Corps of Engineers 155 References 159 Additional Cases 159 Chapter 9. Differing Site Conditions.......................160 Contract Language 160 Background 161 Rules of Application 163 Type II Condition 174 Other Issues 176 Illustrative Example 177 Exercise 9-1: Blauner Construction Co. and U.S. Treasury 179 Exercise 9-2: U.S. Army Corps of Engineers and Stuyvesant Dredging Co. 181 Exercise 9-3: Morrison & Lamping and State of Oregon 184 Exercise 9-4: Umpqua River Navigation Co. and Western Pacific Dredging Corp. 187 Exercise 9-5: Grand Forks, N.D., and Moorhead Construction Co. 190 Exercise 9-6: Western Contracting Corp. and California Department of Water Resources 193 Exercise 9-7: P. J. Maffei Building & Wrecking Corp. and U.S. Government 194
ix Exercise 9-8: Carlos Teodori and Penn Hills School District Authority 195 References 197 Additional Cases 199 Chapter 10. Misrepresentations.............................200 Contract Language 200 Background 201 Rules of Application 202 Relevant Information Withheld 218 Illustrative Example 222 Other Issues 225 Exercise 10-1: J. A. Thompson & Son and State of Hawaii 227 Exercise 10-2: Williams-McWilliams Co., Michigan Wisconsin Pipeline Co., and U.S. Government 228 Exercise 10-3: P. T. & L. Construction Co. and State of New Jersey 232 Exercise 10-4: Charlotte, N.C., and Ruby-Collins 235 Exercise 10-5: Pennsylvania Turnpike Commission and York Engineering & Construction Co. 238 Exercise 10-6: Utah DOT and Thorn Construction Co. 240 Exercise 10-7: Indianapolis and Twin Lakes Enterprises 241 Exercise 10-8: Post & Front Properties and Roanoke Construction Co. 242 Exercise 10-9: Ideker Corp. and Missouri State Highway Commission 242 Exercise 10-10: Waldinger Corp. and Daniel Hamm Drayage Co. 244 Exercise 10-11: Pinkerton & Laws Co. and Roadway Express 246 Exercise 10-12: Flippin Materials Co. and U.S. Government 250 Exercise 10-13: Public Constructors and State of New York Department of Public Works 252
x Contents Exercise 10-14: E. H. Morrill Co. and California Department of Public Works 253 References 255 Additional Case 256 Chapter 11. Defective Specifications.........................257 Contract Language 257 Background 258 Rules of Application 259 Performance Specifications 271 Illustrative Example 276 Exercise 11-1: Blount Brothers and U.S. Government 278 Exercise 11-2: Marine Colloids and M. D. Hardy 279 Exercise 11-3: Western Foundation Corp. and Veterans Administration 281 Exercise 11-4: J. D. Hedin Construction Co. and Veterans Administration 1 283 Exercise 11-5: J. D. Hedin Construction Co. and Veterans Administration 2 286 Exercise 11-6: Weston Racquet Club and Republic Floors of New England 289 Exercise 11-7: Rhone-Poulenc Rorer Pharmaceuticals and Newman Glass Works 291 Exercise 11-8: ALTL and The Architectural Group 292 References 293 Additional Cases 295 Chapter 12. The No-Damages-for-Delay Clause...............296 Contract Language 296 Judicial Attitude 298 Rules of Application 298 Illustrative Examples 308 References 311 Additional Cases 312
xi Chapter 13. Substantial Completion.........................313 Contract Language 313 Background 314 Significance of Substantial Completion 314 Evolution of Substantial Completion 317 Primary Rules of Inquiry 318 Certificate of Substantial Completion 324 Illustrative Examples 325 References 327 Additional Case 328 Chapter 14. Liquidated Damages............................329 Contract Language 329 Background 330 Basic Principles of the Liquidated-Damages Clause 331 Primary Rules of Application 334 Strategy 337 Illustrative Examples 338 Exercise 14-1: S. J. Otinger Construction Co. and Montgomery, Ala., Water Works & Sanitary Sewer Board 341 References 342 Appendix A: Additional Exercises............................343 Exercise 1 343 Exercise 2 345 Exercise 3 347 Exercise 4 352 Exercise 5 354 Exercise 6 359 Exercise 7 362 Appendix B: Exercise Solutions..............................368 Solution: Exercise 3-1 368 Solution: Exercise 6-1 369 Solution: Exercise 6-2 370 Solution: Exercise 6-3 372
xii Contents Solution: Exercise 6-4 373 Solution: Exercise 6-5 374 Solution: Exercise 6-6 375 Solution: Exercise 7-1 376 Solution: Exercise 7-2 377 Solution: Exercise 7-3 378 Solution: Exercise 7-4 380 Solution: Exercise 7-5 381 Solution: Exercise 7-6 382 Solution: Exercise 8-1 383 Solution: Exercise 8-2 384 Solution: Exercise 8-3 385 Solution: Exercise 8-4 387 Solution: Exercise 8-5 388 Solution: Exercise 8-6 389 Solution: Exercise 8-7 390 Solution: Exercise 8-8 391 Solution: Exercise 8-9 392 Solution: Exercise 8-10 394 Solution: Exercise 8-11 395 Solution: Exercise 8-12 396 Solution: Exercise 8-13 397 Solution: Exercise 8-14 398 Solution: Exercise 8-15 399 Solution: Exercise 8-16 400 Solution: Exercise 9-1 401 Solution: Exercise 9-2 402 Solution: Exercise 9-3 403 Solution: Exercise 9-4 404 Solution: Exercise 9-5 405 Solution: Exercise 9-6 405 Solution: Exercise 9-7 406 Solution: Exercise 9-8 407 Solution: Exercise 10-1 408 Solution: Exercise 10-2 409 Solution: Exercise 10-3 411 Solution: Exercise 10-4 412 Solution: Exercise 10-5 413 Solution: Exercise 10-6 414 Solution: Exercise 10-7 415
xiii Solution: Exercise 10-8 416 Solution: Exercise 10-9 417 Solution: Exercise 10-10 418 Solution: Exercise 10-11 419 Solution: Exercise 10-12 420 Solution: Exercise 10-13 421 Solution: Exercise 10-14 422 Solution: Exercise 11-1 423 Solution: Exercise 11-2 424 Solution: Exercise 11-3 425 Solution: Exercise 11-4 427 Solution: Exercise 11-5 428 Solution: Exercise 11-6 429 Solution: Exercise 11-7 430 Solution: Exercise 11-8 431 Case Table 433 Index 441 About the Authors 451