10A —December 8 - 21, 2017 — Commercial Real Estate Law — M id A tlantic
Real Estate Journal
C ommercial R eal E state L aw By Adam J. Sklar, Cole Schotz P.C. Contractors, Know Your Contracts!
R ecently, New Jersey’s Appellate Division re- affirmed the principle
mine the dispute, even if the court believes that strictly applying the contract terms would be unfair to one of the parties under the circum- stances. While this is not a novel legal principle, the Appellate Division, in its unpublished opinion, Wallace Bros, Inc. v. East Brunswick Board of Education, Docket No. A- 1432-15T3 (N.J. App. Div. Nov. 9, 2017), reiterated this tenet in reversing a trial court that granted summary judgment to a general con- tractor that claimed it was
owed final payment on a school construction project because the school board had waited too long to object to the contractor’s work. The Appellate Division found that there were numerous material factual disputes between the parties when examining their allegations and the language in the par- ties’ contract. It, therefore, reversed the trial court’s judgment, and remanded the case back to the trial court for further proceedings. Criti- cally, it appeared from the facts proffered by the school
board that the contractor had not yet complied with the contract’s provisions re- garding the right to receive final payment, such as the contractor’s obligations to provide standard close-out documentation and its failure to complete punch-list work. Wallace Bros. serves as a reminder of how important it is for a contractor to review and, where possible, negoti- ate the terms of a contract before signing it, and then strictly comply with all con- tract provisions during the course of the project through
completion. In the public contracting context, as in Wallace Bros., the contrac- tor generally must accept the terms of the contract on which it bids. It then must strictly follow the procedures set forth in that contract when seeking payment for its work, particularly those provisions which explicitly set forth prerequisites to pay- ment. For example, change order provisions will typical- ly require written documen- tation signed by the owner setting forth the additions or changes to the specified contract work, along with the price to be paid for that work, before such work is even per- formed, and therefore before payment is required to be made by the owner for any such work. Also, as illustrated in Wal- lace Bros., contractors must be sure to compile and main- tain their close-out docu- mentation throughout the project, so that when it is time to submit their close-out packages in connection with final payment, they are not delayed tracking down or lo- cating items such as subcon- tractor lien waivers, as-built drawings, and manufacturer warranties. Note that in the private contracting context, a contractor may attempt to negotiate all contract provi- sions to try to ease the bur- dens of onerous payment and close-out requirements, as well as other critical terms, such as dispute resolution provisions and requirements relating to the performance and inspection of the work itself. In sum, contractors must stay on top of their admin- istrative duties and respon- sibilities in connection with their contracts, in addition to ensuring the proper and complete performance of the work itself. No contracting party wants a construction dispute to end up in litiga- tion, but if it does, the con- tractor will want to ensure that it has done everything by the book (or by the con- tract) to avoid getting tripped up by a technical contract prerequisite with which it failed to comply. Adam J. Sklar is a mem- ber of Cole Schotz P.C.’s Litigation Department and Construction Services Group. n
that a court must strict- ly apply the terms of a c o n s t r u c - t i o n c o n - tract when determining a d i s p u t e between con-
Adam J. Sklar
tracting parties. Where the contract terms speak directly to the issue in dispute, a court may not employ equi- table considerations to deter-
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