Introduction

Those entering into new construction contracts should include custom language addressing the parties’ respective rights and responsibilities related to COVID-19. Many articles and webinars have focused on how traditional contract clauses in existing contracts may respond to COVID-19 issues. The fit is not always clear. Some guesswork is involved and creativity is called upon as square pegs are coaxed into round holes. While there is a need to perform that retrospective analysis to assess how COVID-19 issues will play out under existing contracts, there is no need to propagate uncertainty in new contracts. Indeed, such uncertainty can cause parties to shy away from new contracts or include significant contingencies, neither of which supports an industry trying to recover from the pandemic.

This article addresses custom COVID-19 language for new construction contracts. The principles discussed can be applied to any construction contract. This article is based on two construction contracts for which I successfully drafted and negotiated custom COVID-19 language. One is a private project and the other is a public project. Some of the views expressed during those negotiations are weaved into the discussion to provide both sides’ perspective.
Continue Reading COVID-19 Language for New Construction Contracts: A Practical Approach

The Illinois Contractor Prompt Payment Act, 815 ILCS 603/1, et seq. (the “Act”) was first enacted in 2007 and designed to safeguard contractors and subcontractors on private projects by providing a mechanism to expedite payments for work performed. The Act applies to all private construction projects in Illinois, except those involving single family residences or multiple family residences with twelve or fewer units in a single building. With the Act, Illinois joined a growing number of states that had enacted similar legislation.

On August 20, 2019, Illinois amended the Act and again joined a growing number of states that are expanding their protections for contractors, this time by restricting the amount of retainage that may be withheld on a construction project. The amendment, codified at 815 ILCS 603/20, imposes a ten percent (10%) cap on the amount of retainage that may be withheld and reduces that cap to five percent (5%) once the project is fifty percent (50%) complete. Specifically, the Act provides:
Continue Reading Illinois Expands Protections Under the Contractor Prompt Payment Act by Imposing New Restrictions on Retainage

On April 25 and 26, James Newland, partner in Seyfarth’s Construction Practice Group, will be presenting the “Changes and Claims in Government Construction Contracting” course at the Federal Publications Seminar at the Executive Conference and Training Center in Sterling, Virginia. His presentation will focus on owner changes and contractor claims in the federal government contracting

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