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.[1] 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.[1]  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).[2] Continue Reading Hof Construction: The CBCA Decides How it Will Address Conflicting Decisions of Predecessor Agency