Chapter 5 Agents

AIA “The Contractor shall be solely responsible for and have control over construction means, methods, techniques, sequences, and procedures, and for coordinating all portions of the work under the contract.

Agent (strict interpretation) A contract agreement stated that all disputes between the parties arising out of the contract or execution thereof, shall be referred to the architect, whose decision shall be final. The contractor measured the work performed and requested payment. The owner refused to pay on the grounds that the architect ruled the quotation was inaccurate. The contractor filed suit. Q: Is the contractor barred from filing suit since the decision of the architect is “final”?

Agent (strict interpretation) Decision: –The court ruled that the question of the measurement of the completed work was not a dispute or difference of opinion “connected with the contract or the execution of the work”. Decision for the contractor. British: Kirkwood v. Morrison (1877) (Building Cases by Morrow - p. 89)

Agents A farmer had a barn that needed to be reshingled. He hired a neighbor on an hourly basis for the job. When the neighbor said that the job was too big for him to do, the farmer told him to get another worker to help him. The farmer agreed to furnish all the tools and supplies, including safety equipment. As work was being done, the neighbor fell through the roof and was killed. The administrator of the estate filed suit on behalf of the neighbor’s widow. Q: Was the neighbor an employee (farmer

Agents is liable), or was the neighbor an independent contractor? The administrator contended that he was an employee since the neighbor was paid on an hourly basis, he could be fired at any time, and he had little roofing experience.

Agents Decision: –The test for the answer that the court used was whether the farmer directed the means of performing the work or merely approved the end result. The neighbor acted independently. It did not help that he refused to use the safety equipment. The Contractor’s Legal Problems by Hayward - p. 47

Agents A homeowner hired a contractor to do a roofing repair job. As part of the job, the contractor took some broken windows to a glass and glazing company for repairs. The windows were fixed and the contractor installed them. In the meantime, the owner was not pleased with the work done on the roof. The contractor and owner mutually agreed to cancel the contract with no payment for the contractor. The glass and glazing company was left unpaid. The glass and glazing firm went to the owner for

Agents payment. The owner said that the recovery should be from the contractor. The glass and glazing firm contended that the contractor had acted as an agent for the owner to get the windows fixed. Is the owner obligated to pay (was the contractor an agent)?

Agents Decision: –Yes. The contract was between the contractor and the glazing firm for fixing the owner’s windows. The firm fixed the windows and had executed its obligations. By accepting (and keeping) the windows, the owner ratified the agreement made between the contractor and the glazing firm. 338 NW 2d 631

Architect’s Authority A contract stated that work was to proceed “according to the directions given by the architect”. During construction, the architect directed the contractor to use roofing that was 10% more expensive than roofing that was specified. The contractor said he agreed to go by the contract and to do no more. The architect said the contract says he is to perform in accordance with the directions of the architect and “I’m directing you to use different roofing”. Q: Must the cont’r install different roofing?

Architect’s Authority Decision: –No. The contract is for the architect to “give directions to carry out the work according to the contract, plans, and specifications, but it does not give him any power to alter them”. The Contractor’s Legal Problems by Hayward - p. 144

Architect’s Authority A contractor was to perform under the direction and to the satisfaction of the architect, acting as the agent for the owner. Retainage of 10% was to be withheld from each payment. The cont’r made good progress and when several payments had been made, the arch. was asked to not withhold any portion in an effort to avoid financing costs for the cont’r. The arch. approved this request since the cont’r was doing good work. The owner refused to issue payment and the cont’r sued. Q: Can the cont’r force full payments?

Architect’s Authority Decision: –No. An agent cannot bind the owner beyond the strict terms of the contract itself unless the agent has special authority. The Contractor’s Legal Problems by Hayward - p. 105

apparent authority of agents

Agents: Sullivan v. Midwest Case:Frank Sullivan Co. vs. Midwest Sheetmetal Works Project:U.S. Post Office and Customs House, St. Paul, Minn. G.C.:Electronic & Missile Facilities of NYC SubC.:Frank Sullivan Co. (Boston, Mass.) Plumbing/electrical bid of $1,650,000. Key figure in case: John Sullivan Sub-SubC.:Midwest Sheetmetal Works (St. Paul, Minn.) Key figure in case: Mike Elnicky

Sullivan vs. Midwest (cont.) Monday, Jan. 22: –John Sullivan visited the Midwest office. –General information was shared. –Midwest said it wanted to do all of the work. –John said he would try to get a copy of the prime contract. Tuesday, Jan. 23: –John Sullivan again at the Midwest office. –John let Mike Elnicky review the entire estimate that Sullivan had prepared. –John showed Mike all the bids received.

Sullivan vs. Midwest (cont.) Wednesday, Jan. 24: –John Sullivan got a copy of the prime contract from the GC’s office. –Mike Elnicky was allowed to keep the contract and review it overnight. –John told Mike that Sullivan would need $100,000 if it gave all of the work to Midwest. Thursday, Jan. 25: –John called Frank Sullivan. –Frank told John that EMF wanted Sullivan to do all of the plumbing and mech. work.

Sullivan vs. Midwest (cont.) Thursday, Jan. 25 (cont.): –John was told to come back to Boston. –John continued to negotiate with Midwest. Saturday, Jan. 27: –Midwest finished estimating the work for the project. –John Sullivan and Mike Elnicky started to negotiate a deal. –Nothing was resolved at the end of the day.

Sullivan vs. Midwest (cont.) Sunday, Jan. 28: –Mike Elnicky came to John’s hotel room with a fifth of scotch. –They negotiated for 3-1/2 hours. –A simple agreement was drafted and typed by the hotel typist. –John returned to Boston.

Sullivan vs. Midwest (cont.) Terms of agreement: –“The Midwest Sheetmetal Co. agrees to take over Frank Sullivan’s contract with EMF in the amount of one million five hundred fifty and 00/100 dollars ($1,550,000)...” –“...Midwest will man the above mentioned project on January 29 to show good faith regarding this contract.”

Sullivan vs. Midwest (cont.) Monday, Jan. 29: –Midwest had no people on the project. Tuesday, Jan. 30: –Midwest had workers assigned to project. –Sullivan’s superintendent sent them off the job. –John Sullivan wrote to Midwest: “The agreement made on Jan. 28, between Sullivan and Midwest is hereby cancelled”. Midwest filed suit.

Sullivan vs. Midwest (cont.) Did John Sullivan have apparent authority? –John was sent to St. Paul to get the job started. –John was instructed to contact area firms. –John had a copy of the Sullivan estimate. –Frank had told Elnicky that a “man” was being sent. –John had the Sullivan name. –John was the highest ranking Sullivan employee on the job.

Sullivan vs. Midwest (cont.) Did John Sullivan have apparent authority? (cont.) –John frequently talked with Frank Sullivan. –Frank knew of John’s negotiations with Midwest. –Frank did not contact Midwest to terminate discussions.