There are many provisions in a construction contract which must be adhered to. However, few of these provisions are so easy to overlook—and so costly when you do—as the provisions requiring you to notify your upstream contractor or owner of any claims you have relating to the contract. The case of Adonis Construction, LLC v. Battle Construction, Inc. (103 AD3d 1209 [4th Dept 2013]) serves as a warning to those who fail to pay attention to those provisions.
Adonis Construction was a subcontractor to Battle Construction, the prime contractor on a building renovation. During the course of the work, Adonis was directed by Battle’s superintendent to remove certain walls (which were not included in the plans for removal). The removal of the walls was in error, which error was discovered at a meeting several weeks later. Adonis was not aware at the time that it removed the walls that the construction plans showed that those walls were to be left intact. Approximately six weeks after Adonis learned that the walls were removed in error, and following Battle’s notice to Adonis that it would back-charge Adonis for the cost of replacing the walls, Adonis submitted a claim to Battle requesting payment for removing the walls. The claim also requested payment for extra work related to a concrete floor and the removal of light fixtures.
With respect to the work on the concrete floor and the removal of the light fixtures, the court noted that Adonis’ subcontract provided that it was bound by the terms of the prime contract. The prime contract required approval of extra work before it was commenced, “but in no event any later than three days from the event giving rise to the claim.” Because of Adonis’ failure to timely notify Battle, Adonis was barred from pursuing the concrete floor and light fixture portion of its claim.
With respect to the wall removal portion of the claim, the court looked to the subcontract. The subcontract provided “Subcontractor shall, within five days of receiving a direction or encountering a condition, it regards as a change, alteration or extra work, submit to Contractor a written cost or credit proposal; otherwise, Subcontractor shall be bound by such increase or credit as Contractor is able to obtain from Owner. Subcontractor waives any claim against Contractor for compensation law equitable adjustment for any claims, changes or extra work, except to the extent the same is allowed and paid to Contractor by the Owner.” The court found that where the parties have set down their agreement in a clear, complete document, a writing should be enforced according to its terms. Since the subcontract governing demolition work requires strict compliance with the notice provisions, such compliance is a condition precedent to recovery in an action seeking compensation for extra work. The court concluded that Adonis was obligated to seek compensation for the extra work pursuant to the terms of the contract when it learned that a removal of the walls constituted extra work, and that Adonis failed to do so in a timely manner. Because conditions precedent will be strictly enforced, the clear direction by Battle’s superintendent to Adonis with respect to removal of the walls was not sufficient to excuse Adonis’ failure to comply with the notice provisions of the contract.
Your contract (and any contracts incorporated into that contract) can contain a number of provisions that can be easily overlooked, including crucial notice provisions. It is important that you read all of the contract documents and be knowledgeable of the deadlines they impose. If you have any questions about your obligations under the contract, or how best to preserve your rights, you should consult with counsel.