July, 2012
6
High-Profile Special Supplement: 60th Anniversary CBC
Photo from the early days of the IPC.
BL Companies is proud to be a member of the Connecticut Building Congress.
Congratulations on 60 Years! CREATIVITY ▪ QUALITY ▪ EXPERTISE
www.blcompanies.com 800.301.3077 Meriden | Hartford An Employee-Owned Company
Focus:
Educational Facilities Developments
Agostini Builds Norwood HS
241 Narragansett Park Drive, East Providence, RI 02916 Phone (401) 431-1200 Fax: (401) 431-0049
Compass Project Management CM, Ai3 Architect
w w w. b a c o n c o n s t r u c t i o n . c o m
(above) gymnasium (below) auditorium
Norwood, MA - Agostini Construction Company of East Providence, R.I. along with Compass Project Management, Inc. of Medfield, Mass., the owner’s project manager, teamed up with the Massachusetts School Building Authority (MSBA) and Architectural Involution (Ai3) of Wayland to successfully manage, design, and build the new Norwood High School. The new high school was the first model built under the MSBA’s Model School Program...see story on page 32. (above) athletic field (top and below) Entrance to athletic center and performing arts center.
Norwood High School main entrance
Inside this Issue
September 2011
Windover Construction Completes Three School and College Projects BOND CM for UMass Fitchburg State Project Erland Tops Off New School Center with Robert Olsen + Assoc. LLD Designs, KBE Builds URI’s Hillside Residence Hall Profile: CTA Cements Place as Leading School Builder Cutler Associates’ Design Build Anna Maria College Holds Open House Oldcastle Precast Awarded Liberty Terrace Dormitory Featuring: BC Project Achieves LEED Platinum Tewksbury High School Tops Off UMass Lowell Begins Steel Erection
Library P.O. Box 7, Pembroke, MA 02359 Change Service Requested
Suffolk Construction Builds The Victor Luxury Apartments Pro Con Breaks Ground For Aviv Center for Living, KDA Architect Contracting Specialists Awarded Ground Breaking for Bristol Hotel Construction Starts on New Storrs Center Increasing Natural Gas Demand in NE by Douglas Pope MIT Sloan: Archieving Acoustical, Audiovisual, and Technological Success Colleges Carving out New Space on Existing Campuses by Julie Nugent
plus Connecticut Facilities, Heathcare, Green News, Awards, Multi Residential, Business News, People, Calendar and more...
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Construction Practice Tip – Termination Clauses
By Mary B. Ryan Termination of construction contracts is an area fraught with significant risk and potentially devastating consequences to the parties and the project. It is a remedy that should be exercised with the utmost caution and exactitude. There are two types of termination provisions in construction projects – for cause and for convenience. Briefly, a termination for cause is a right that can be exercised by Mary Ryan either party to the contract when the other party commits a material breach. In contrast, a termination for convenience is typically exercisable by the owner with respect to the general contractor or by a general contractor with respect to a subcontractor and is without cause or a need to justify the decision. Termination for Cause The grounds for and method of terminating for cause can vary considerably, so it is vitally important for the party exercising this right to make sure that proper notice is given (including to the surety on a performance bond) during the time period specified in the contract and that it set forth the material breach(es) at issue. The contract may contain additional termination preconditions, such as providing an opportunity to cure for a specified time period or certification by the architect of record that grounds for termination for fault exist. Failure to comply with any of these provisions may render the termination wrongful. An owner who wrongfully terminates a contract may be ordered to pay the general contractor the value of the work performed, lost profits on unperformed work, and direct or consequential damages. Sometimes the termination for cause provision will also include a safety net for the owner in the event the owner improperly terminated for cause, by converting a defective default termination into a termination for convenience, thus substantially minimizing the owner’s risks. Termination for Convenience Not all construction contracts contain termination for convenience provisions, which originated in federal contracts. While there is an extensive body of federal case law interpreting when and how such rights are properly exercised, in the private sector in Connecticut, where there is a grow-
ing trend to include termination for convenience clauses, there is a dearth of case law to provide guidance in the event a dispute arises upon the owner’s exercise of such right. As a result it is extremely important that termination for convenience provisions describe in detail the compensation to which the terminated party is entitled. In federal contracts and generally in non-AIA contracts, a termination for convenience precludes recovery of profit on the work not performed as of the termination date. Even when an allowance is made for some profit, it is usually substantially less than the contractor would have earned if it completed the project work. The termination for convenience language contained in AIA A2012007 General Conditions, Section 14.4.3 provides for recovery for work executed, costs incurred by the termination, and reasonable overhead and profit on the work not executed. After a termination for convenience, disputes often arise when the owner seeks to assert set-off and counterclaims based upon pretermination breaches. In some states, such as New York, there is a developed body of law; in others, such as Connecticut, there is a dearth of case law. In a 1998 Connecticut trial court decision, a termination for convenience was held to preclude the owner’s claims for pretermination damages. In contrast, in a 2010 case, the trial court relied heavily on the contract language to find that the owner had preserved certain rights and remedies and could assert those even after terminating for convenience. In Connecticut, owners should confirm that the termination for convenience provisions in their contracts contain language preserving the owner’s right to assert claims against the contractor notwithstanding the owner’s termination for convenience. Contractors, on the other hand, will want to include contract language that precludes such claims in the event of a termination for convenience. (This article is for general informational purposes only, does not constitute and should not be relied upon as legal advice and does not create an attorney-client relationship between Gordon, Muir and Foley, LLP and any party. Statutes and case law vary from jurisdiction to jurisdiction and may change from time to time. You should consult a licensed attorney for legal advice relating to your specific situation.) Mary B. Ryan is an attorney with Gordon, Muir and Foley, LLP, practicing in the firm’s construction law unit.