Construction Law Today : Construction Lawyer & Attorney : Joshua Glazov : Design Build Contracts, Construction Bankruptcy

How enforceable are contractual limitations of liability?   According to a panel of Illinois judges recently: very enforceable. Their decision: Zerjal v. Daech & Bauer Construction, Inc. (PDF)  

Summary: Zerjal v. Daech & Bauer Construction, Inc.

This decision concerns the limitation of liability in a home inspector’s contract.  But the principles involved affect building contractors, architects, engineers, other professionals, and anyone else who would also like to contractually limit their exposure.  And it's all the more compelling because these judges enforce the limitation not against a Fortune 100 company, but against that most sacred of judicially protected constituencies: the homeowner.

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The D'Oench, Duhme doctrine is active again, this time barring guarantors' fraud claims and defenses in Minnesota.

Outsource Services Management, LLC v. Ginsburg

Earlier this month, Judge Donovan Frank applied the D'Oench, Duhme doctrine's statutory companion, Section 13(e) of the Federal Deposit Insurance Act, a/k/a 12 U.S.C. §1823(e), to dismiss fraud claims and defenses alleged by a group of investors who guaranteed a construction loan for the construction of the Northern Winz Casino in Box Elder, Montana.  The case: Outsource Services Management, LLC v. Ginsburg (PDF).

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No. 3: Deadlines and Delays

Deadlines and delays are No. 3 on the list of top ten construction contract terms.  A construction contract will often have many deadlines, but one deadline looms largest: substantial completion.  That's because substantial completion is when the Work reaches the point where an owner can rent it, sell it, or work or live in it.  And there's usually a tight schedule for reaching that point. 

The deadline for substantial completion is often also critical to satisfy obligations to third-parties: local government requirements for completion by a specified date, availability of public incentives (e.g., tax credits or subsidies for a "green" building), or refinancing a construction loan before a permanent loan commitment expires.

Areas we'll cover here:

• Identifying deadlines
• "Excused Delays" that postpone deadlines
• Delays caused by an owner, or another, up-the-chain, contractor that postpone deadlines and increase contract prices
• Delay notices
• Delay damages

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Have you recently wondered how asset valuation or appraisal works?  Surely over the last three years you may have pondered one of these:

• How much value did a contractor's work add to a piece of property?
   
• How much is collateral worth?  Should a borrower be required to fund more money to restore a loan's minimum debt-to-equity balance?  How much money?
   
• How much is a loan, or portfolio of loans, worth?  How did they decide how likely a borrower, or a bunch of borrowers put together, is to default?

• What is "indubitably equivalent value (PDF)" for an asset under the Bankruptcy Code?

Maybe the answer lies in the movie Midway?  It was a favorite of my brother and me when we were kids - lots of ships and airplanes shooting each other up.  But watching it on TV recently I noticed a piece of dialogue that went over the heads of two grammar school boys.  It's between the fictional Captain Matt Garth (Charlton Heston) and cryptanalyst, Commander Joseph Rochefort (Hal Holbrooke). They're talking about breaking Japanese naval codes early in 1942.  Could you hear the same exchange with MBAs or analysts in the past week, or decade?

"Analysis" by Rochefort and his team actually succeeded in cracking critical parts of the Japanese code, playing a pivotal role in Second Word War.  Are contemporary analysts and appraisers as successful today?

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