Case Studies - Construction
Avoiding Narrow Doors - and Million-Dollar Liability
The building may be beautiful, but if its doors are narrower than required under the Americans with Disabilities Act, it can be a big and very expensive problem.
Our client, a construction company, asked us to review a contract it had negotiated to build a very large multi-family residential development. We noted in our review that the contract required our client to warrant to the developer that its construction would comply with all applicable law. We asked whether the architect’s plans had been reviewed for compliance with the Americans with Disabilities Act and FHA regulations and were told that they had not. Upon review, it was discovered that the doors as specified in the construction documents would have been too narrow to comply with ADA and FHA regulations. We avoided the problem for our client by negotiating the “comply with all laws” language out of the contract. The developer avoided the problem – and a potential million-dollar expenditure to cure – by having the architect revise the drawings and review the entire project for ADA and FHA compliance.
We encourage our clients to let us perform ADA/FHA and Architectural Barrier Act reviews at new sites – to spot issues before they become major problems, and to write indemnification clauses that protect clients if architects make compliance mistakes.
Protecting the Subcontractor from an Unexpected Pass-Through Liability
Our client was the subcontractor on a large municipal project. The proposed agreement between the general contractor and our client was extremely one-sided in favor of the general contractor. Unfortunately, our client had limited bargaining power and could not expect a balanced agreement under the best of circumstances. Because we knew we could not engage in extended and detailed negotiations with the general, we identified critical risks imposed by the subcontract and focused on negotiating just a small number of key revisions. One such revision required the general to increase the contract price to cover additional costs if the municipality required the use of union labor on the job. In fact, the municipality imposed the union labor requirement and the additional cost was roughly $500,000 – and our client’s contract was increased by that amount. Without our foresight and negotiation skills, our client would have lost the entire profit on the project or, worse yet, sustained a loss.
Making Peace and Finding Profit for the General Contractor
Our client, the general contractor, was dissatisfied with the quality and timeliness of the subcontractor’s grading and excavation. The subcontractor insisted its work was more than adequate and blamed every problem on the general contractor. Our client wanted to replace the subcontractor and file suit, but faced the prospect of substantial liquidated damages if the project was not delivered to the owner on time. We quickly evaluated the situation and recommended that we attempt to negotiate a resolution rather than risk delay and liquidated damages which the general might someday recover as damages from the subcontractor, if the subcontractor remained solvent. We quickly reviewed the contract documents, interviewed the players and studied every e-mail and letter since the project began. Then we met with the subcontractor and presented convincing, detailed evidence of the subcontractor’s violations of the contract. Instead of months of delay and years of litigation, in days we negotiated a mutually acceptable resolution that satisfied both parties, allowed the project to proceed, and brought the project in on time and on budget.
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