Notice is one of those often-overlooked (some times on purpose) areas of the contract. Most contracts require that notice be given whenever a contractor is planning on making a claim for extra money: for work the contractor claims is outside its scope of work and so entitles him to extra money, for delay or acceleration claims, for the prom dress his daughter got ruined when she visited the jobsite, or for anything else. Most contractors, however (or at least most that come through my door) tend to think of these provisions as being “requirements” in the sense that wearing a cat on your head is a “requirement”: it’s nice for those who are into that kind of thing, but not necessarily what the average person has to do each day.
These contractors are in for nasty surprises. Especially with public agencies, which have teams of lawyers who often jump on notice requirements as the first line of defense when they disagree with a claim by a contractor. Notice provisions are often enforced, and so can result in huge losses for a non-complying contractor. And, of course, if the prime contractor doesn’t get money from an owner because notice wasn’t properly given, you can bet there’s a good chance that very same contractor is going to make a claim against its subs and say they didn’t comply with the notice terms, either.
If notice isn’t given according to the terms and requirements of the (sub)contract, there is still a ray of hope for the contractor. First of all, even if there is a formal notice requirement (like some letter that is required to be drafted on a form provided by the public entity), the courts will sometimes find that “constructive notice” was given which fulfills this requirement. Constructive notice can be given through informal letters other than those prescribed by the contract, through certain project documents (like change order requests), or through meeting minutes. There is also a legal argument that the public entity waives the notice requirement when it considers the extra claim, even though the notice requirement has not been met.
However, all these are technical legal arguments. A funny thing about technical legal arguments: they tend to be based on legal information and they tend to be highly technical. Both of these combine to either 1) put a jury to sleep or 2) lose a jury in the Swamps of Confusion and the Mists of Boredom. Whereas the other side (the side arguing lack of notice) just has to put a big blowup of the notice requirement up for the jury, ask the contractor to read it aloud, and then say “Did you do that?”
Juries tend to buy this sort of thing.
Moral: it’s better to just fulfill the contract notice requirements than to present late claims and count on your attorney’s skill and ability to get you out of the inevitable loss of revenue.
Now, this is a short entry in our series. But, like me, “short” doesn’t mean “unimportant.” Sit up straight. Pay attention. Meet your notice requirements. And if you are a sub to a sub to a sub, make sure that flow-down provisions (we’ve talked about those before) don’t require you to meet notice provisions in other people’s contracts.
Take notice. Make notice. Get paid.
These contractors are in for nasty surprises. Especially with public agencies, which have teams of lawyers who often jump on notice requirements as the first line of defense when they disagree with a claim by a contractor. Notice provisions are often enforced, and so can result in huge losses for a non-complying contractor. And, of course, if the prime contractor doesn’t get money from an owner because notice wasn’t properly given, you can bet there’s a good chance that very same contractor is going to make a claim against its subs and say they didn’t comply with the notice terms, either.
If notice isn’t given according to the terms and requirements of the (sub)contract, there is still a ray of hope for the contractor. First of all, even if there is a formal notice requirement (like some letter that is required to be drafted on a form provided by the public entity), the courts will sometimes find that “constructive notice” was given which fulfills this requirement. Constructive notice can be given through informal letters other than those prescribed by the contract, through certain project documents (like change order requests), or through meeting minutes. There is also a legal argument that the public entity waives the notice requirement when it considers the extra claim, even though the notice requirement has not been met.
However, all these are technical legal arguments. A funny thing about technical legal arguments: they tend to be based on legal information and they tend to be highly technical. Both of these combine to either 1) put a jury to sleep or 2) lose a jury in the Swamps of Confusion and the Mists of Boredom. Whereas the other side (the side arguing lack of notice) just has to put a big blowup of the notice requirement up for the jury, ask the contractor to read it aloud, and then say “Did you do that?”
Juries tend to buy this sort of thing.
Moral: it’s better to just fulfill the contract notice requirements than to present late claims and count on your attorney’s skill and ability to get you out of the inevitable loss of revenue.
Now, this is a short entry in our series. But, like me, “short” doesn’t mean “unimportant.” Sit up straight. Pay attention. Meet your notice requirements. And if you are a sub to a sub to a sub, make sure that flow-down provisions (we’ve talked about those before) don’t require you to meet notice provisions in other people’s contracts.
Take notice. Make notice. Get paid.
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