Defects and/or delayed delivery of owner-furnished items are valid bases for claim.

In Holloway Consulting’s construction claims engagements, we have found that if the contract requires the construction owner to furnish the contractor with certain property or material, and it proves to be unsuitable, damaged, or otherwise defective, relief should be available to the contractor. In the absence of such a clause, recovery for defective owner-furnished items can be recovered under the “Changes” clause as a constructive change claim. Examples of defective owner-furnished items include:

  1. defective models,
  2. defective patterns,
  3. erroneous data or information,
  4. erroneous drawings,
  5. erroneously marked parts,
  6. damaged equipment, or
  7. equipment in disrepair.

In addition, Holloway has seen that if the owner is to furnish the contractor with property, data, or materials and delays in doing so, damages can also be recovered under a constructive change claim. In cases where the owner has been negligent or willfully delays in furnishing such items, it has been held that he breached his implied obligation not to interfere with the performance of the contractor, and damages  have been recovered by suing in court for breach of contract.

If the owner expressly or impliedly commits himself to furnish materials by a specific date, any delay from that date will entitle the contractor to recover, even if the owner diligently attempted to meet it. Where no specific date is contained in the contract, the owner must supply the property within a reasonable time for use in the ordinary and economical course of performing the contract – but he can escape all liability if he shows that he diligently attempted to obtain, and furnish the property.

What constitutes negligence or fault which will make the owner liable for delayed delivery? For example: If the owner failed to order reinforcing steel early enough and in sufficient quantities to secure timely delivery, he would be liable for the resulting delays.

If the owner contracted to furnish steel piling, he would be liable for late delivery in delaying the placing of an order while negotiating with the piling manufacturer. The owner would not be liable when late delivery was due to the operation of a priority system, and both parties were aware that the material might be difficult to obtain. An owner would not be liable for delay if he was not aware that the material would be difficult to obtain and had promptly placed an order and diligently attempted to obtain delivery.

Be aware that the burden of proving an excusable reason for delayed delivery will be on the owner. Moreover, the requirement that the owner act with diligence in supplying promised property has been held to be a binding obligation which cannot be avoided by the owner – even if he attempts to do so by including a specific provision in the contract to the effect that he will not be liable for increased costs resulting from delayed deliveries of such property.

It is well established that a contractor is not only entitled to a time extension for late delivery of items, but is also entitled to an equitable adjustment for losses incurred due to the delay.

CONTACT INFO

J. Steve Holloway, GC
The Holloway Consulting Group, LLC
10885 W. Beloit Pl.
Lakewood, CO 80227
Tel: (303) 984-1941
Email: hollowayconsultinggroup@gmail.com

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