For any “prime” or general construction contract that is $500,000 or greater and all subcontracts thereunder (regardless of amount), Tennessee law requires that the owner (and by implication, any construction lender funding construction draws and any general contractor responsible for payment to subcontractors) deposit the amount of any retainage in a third-party, interest-bearing escrow account with a financial institution at the time the retainage is withheld. (TN Code § 66-34-104.) Continue Reading A Trap for the Unwary Owner, Lender, and General Contractor: Avoiding Criminal Liability and Civil Penalties in Connection with Tennessee Construction Projects
Since taking office in 2017, President Trump has made no secret of his “Buy American, Hire American” initiative. The President recently took another step to promote American industry by signing an Executive Order on January 31, 2019, (the “Order”) which instructs all agencies to “maximize the use of iron and aluminum as well as steel, cement, and other manufactured products produced in the United States in contracts, sub-contracts, purchase orders, or sub-awards.”
This recent Order comes on the heels of Executive Order No. 13788, signed on April 28, 2017, which required federal agencies to “scrupulously monitor, enforce, and comply with Buy American laws, to the extent they apply, and minimize the use of waivers, consistent with applicable law.” Executive Order 13788 also mandated federal agency action on Buy American laws at specified dates, as well as subsequent reporting on implementation of Buy American laws. In short, agencies were instructed to follow the law and report back. Continue Reading President Trump Issues Another Executive Order in Pursuit of Buy American Initiative
Seyfarth Shaw Construction partner Charles “Chuck” Wall and associate Michael Wagner recently authored a Construction Executive article on how to navigate risk allocation in public-private partnership (P3) agreements. Wall and Wagner focused on P3/concession agreements, design-build contracts, interface agreements, and more. Read “Navigating Risk Allocation in P3 Agreements” from Construction Executive here.
The indemnity clause is one of the most scrutinized, negotiated, and litigated terms of any construction contract. The indemnity clause is a risk-shifting provision that requires the contractor to defend, reimburse, and “hold harmless” the owner and architect from claims and liability “arising out of” the contractor’s work. The indemnity clause is focused on bodily injury and property damage suffered by third parties seeking recompense against the owner. Indemnity clauses share the same core purpose, but can have varying reach, depending on the language used. Continue Reading What Does the Indemnity Clause Cover and When Does the Claim Accrue?
The economic loss doctrine is widely misunderstood and often misapplied. The premise of the economic loss doctrine is that a party cannot recover purely economic losses in a tort action. To understand the rationale behind the economic loss doctrine, attorneys must simply recall that joyous moment when they first set their eyes upon Hadley v. Baxendale. The Hadley decision stands for the proposition that, in a breach of contract action, a party may only recover the damages that naturally flow from the breach, or that were of the type within the reasonable contemplation of the parties at the time of contracting. In other words, economic losses such as lost profits, diminished bonding capacity, and loss of use are not recoverable in a breach of contract action unless such damages were contemplated by the parties at the time of contracting. Continue Reading Understanding the Economic Loss Doctrine is Critical for Construction Professionals
The Contract Disputes Act presents government contractors with two venue options for appealing an adverse final decision. Within one year of receiving a denial of its claim, the contractor may appeal to the United States Court of Federal Claims (COFC) or, in the alternative, the contractor has ninety days to appeal to an administrative law judge in the appropriate agency board of contract appeals. For defense contractors, that means the Armed Services Board of Contract Appeals; and with a few exceptions, non-defense contractors may appeal to the Civilian Board of Contract Appeals (CBCA). Continue Reading Hof Construction: The CBCA Decides How it Will Address Conflicting Decisions of Predecessor Agency