Column and Beam

A blog for design and construction professionals.

Category: Contracts (page 1 of 5)

What You Need to Know Choice of Law

You’ve seen it in many contracts, it is a contract clause that states something like:

This Contract is governed by South Carolina law.

You might have even debated with your client which state should be inserted into the clause.  Many architect, engineers, contractors – and even some attorneys  – do not understand the implication and importance of a choice of law clause. 

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Subcontractors and Suppliers – Why Should You Send a Notice of Furnishing of Labor/Materials on Your Next Project?

On large construction projects, it is common for significant labor or materials to be supplied by lower-tier subcontractors and material suppliers – that is, entities who do not contract with the general or prime contractor, but instead contract directly with a subcontractor.  Without a direct contractual relationship, the prime contractor may not know the identity of all lower-tier subcontractors or suppliers.  As a result, the prime contractor may lack sufficient information to ensure that lower-tier subcontractors or suppliers have been paid before releasing payment to its subcontractor.  The prime contractor may first learn the identity of lower-tier subcontractors or suppliers when they contact the prime contractor claiming that they have not been paid for their labor or materials or when they file a mechanic’s lien or payment bond claim.

However, remote subcontractors and suppliers may avoid this situation by sending a Notice of Furnishing Labor or Materials to the general contractor before supplying labor or materials.  This provides notice to the prime contractor of the identity of lower-tier subcontractors and may help subcontractors get paid. 

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Show Me The Money! – Why Design Professionals Are Often Lawsuit Targets.

Why are design professionals attractive targets in litigation relating to construction projects?  The answer is easy – they have good insurance coverage.  To understand why, you need to know the differences between the Commercial General Liability (CGL) policies purchased by contractors and subcontractors and professional liability coverage purchased by most design professionals.

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Why Design Professionals Should Disclaim Implied Warranties

South Carolina is one of a handful of states that recognizes an implied warranty that applies to design services.  In South Carolina, certain warranties are implied into every design contract that is governed by South Carolina law.  The South Carolina Supreme Court recognizes an implied warranty of “fitness of plans and specifications” where a design professional provides plans and specifications for use on a construction project.  Of even greater concern, in Tommy L. Griffin Plumbing & Heating Co. v. Jordan, Jones & Goulding, Inc., the South Carolina Supreme Court potentially expanded this implied warranty when it found that an engineer who performed both design and construction administration services potentially warranted not only the design but also the “quality of construction.” 

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What You Need to Know About Waivers of Subrogation

A waiver of subrogation is an effective risk management tool.   Before you sign a contract containing such a clause, you need to know what a waiver of subrogation means and who needs to agree to the waiver to make it effective.  Subrogation is “the principle under which an insurer that has paid a loss under an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the policy.”  This means that an insurer who pays a claim has the right to “step into the shoes” of another party to bring a claim for damages. 

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