Construction Engineering 380 Contract Interpretation

Contract Ambiguity Legal requirements –Substantial completion (not strict) –Law controls completion, not contract language –Must prove causation to collect residual damages (high burden of proof) –Contractor not liable for objectively impossible work specified (use 3 rd party standard) –Contractor not liable for practically impossible or commercially senseless work specified (use 3 rd party standard, must be triggered by an altering event)

Shop Drawings –Owner/designer approval does not relieve contractor/supplier of responsibility –Contractor must warn owner if design defect is open, obvious, and apparent –Waiver- knowingly relinquishing a right (proved by evidence of conduct, not writing) –Acceptance- owner can accept work with knowledge of obvious defect Contract Ambiguity

Onerous or exculpatory clauses- contract language that nullifies a fundamental legal right or violated public policy Contract Ambiguity

Scope of work should be clear in the plans and specifications to aid contract interpretation and reduce ambiguity Interpretation of scope involves determination if contract is ambiguous, then application of various rules to determine scope interpretation Contract Ambiguity

Ambiguous contract –Two reasonable interpretations –Only examine documentary evidence –Must understand the claims for determination –Absurd interpretations disallowed –Onerous, exculpatory, and unconscionable interpretations are disallowed Contract Ambiguity

Application of rules –Parol evidence- outside the contract (letters, memos, phone logs, meeting minutes- must be in writing) –Patent ambiguity- resolve in favor of drafting party –Custom and usage- must be introduced through expert testimony Contract Ambiguity

–Course of dealing- prior behaviors between the parties –Ordinary meaning- special definitions of words not allowed unless spelled out –Implied terms- some work is implied as necessary for completion (used carefully) –Whole argument- must follow the spirit of the entire agreement Contract Ambiguity

–Clear expression of intent- drafter must make intent obvious or ruling will go to non-drafting party (contra proferentem) –Clerical error- clerical errors are ignored unless materially relied upon by non- drafting party Contract Ambiguity

–Order of precedence- conflicting provisions are common. Preference given to: Special over general Handwritten over typewritten Typewritten over pre-printed Words over figures