Legal Updates By Jonathan J. Sweet
Why Binding Arbitration May Not Be Good
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Over the last seventy years or so, private binding arbitration through organizations such as the American Arbitration Association (AAA) became popular. Many contracts still contain an arbitration clause, and specify that arbitration will be used to resolve disputes under the contract through AAA.
Below is my analysis to provide support for my theory that the advantages of arbitration are outweighed by the disadvantages, and why I do not recommend using arbitration clauses in contract, or relying on arbitration clauses if you can choose litigation.
How Are Allowances Different From Line Items in Construction Contracts?
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A typical construction contract, either residential or commercial, is likely to have a total price for the construction work to be performed, and a list of line items which make up of the components of the total price. Line items are different from allowances. A line item should be a number that does not vary as the construction project goes forward. Allowances often vary, either to increase or decrease the construction contract price.
Read more: How Are Allowances Different From Line Items in Construction Contracts?
Getting Paid
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GETTING PAID
Anyone performing services under a written contract should be familiar with the terms and conditions of the contract he or she executes. The service provider should pay special attention to certain clauses in the contract.
Two areas are of significance in relation to getting paid:
A. Clauses which require you to continue to provide services even if a payment dispute arises with your client
B. Clauses which state your payment is not due until your client receives payment from another party.
Construction Law: Huge Wage Theft Citation Imposed on Construction Firm
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Read more: Construction Law: Huge Wage Theft Citation Imposed on Construction Firm
Effective Dispute Resolution
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If you retain an attorney to help you resolve a dispute, part of your attorney’s job is to help you to focus your attention on moving forward rather than looking backward when deciding how to attempt to resolve a dispute. Looking backward often involves investing future resources in trying to correct the results of a past decision you may have made. It may appear that you entered into a bad contract, or agreed to take on a partner who you now realize is less than honest. You now are stuck with money owed, or being in a partnership which you want to end.
Construction Law: Ownership of and Use of Construction Design
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Construction design is a form of intellectual property. After it is created, who owns it? The architect is usually the author of the design documents, although construction design often represents a combined effort between the owner, architect, contractor, and others on a construction project.
Why, as a contractor, should you care who owns the design? Because it may affect your ability to use the design to build the project, build additions to an existing structure, reuse the design for another project, and to use photographs or other images of the design or structure you have built.
For example, if you are hired to build a project, and the architect and owner disagree on an issue, and the owner terminates its contract with the architect, the architect can stop the owner from completing the project without paying an additional licensing fee. If the owner refuses to pay an additional fee to the former project architect, and the architect sues the owner for using the design, you, as a contractor can be named in that suit if you are continuing to use the design, and liable for damages.
Read more: Construction Law: Ownership of and Use of Construction Design
Construction Law: Under New Law, Changing Licenses Will Not Hide Contractor Citations
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Read more: Construction Law: Under New Law, Changing Licenses Will Not Hide Contractor Citations
Construction Law: Dodd-Frank Federal Law Prohibits Contractor-Seller From Financing Sale of Owner-Occupied Residential Property
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Construction Law: No Criminal Charges for Berkeley Balcony Collapse
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On March 29, 2016, Nancy O’Malley of the Alameda County District Attorney’s office announced that no criminal charges would be filed in last year’s collapse of an apartment balcony in Berkeley that killed six students and injured seven others after a nine-month investigation failed to show “gross or reckless conduct” in the construction and maintenance of the apartment complex, as reported in the San Francisco Chronicle.
Read more: Construction Law: No Criminal Charges for Berkeley Balcony Collapse
Construction Law: California Contractor's Bond Limit Must Be Raised By January 1, 2016 To Avoid License Suspension
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Business Law: Reducing Your Exposure To Claims
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Businesses usually have what is called Comprehensive General Liability (CGL) Insurance. This type of insurance is typically written on what is called an “occurrence” basis. Occurrence insurance exists for claims which arise from acts which were taken or “occurred” during the policy period.
A. Coverage Under a CGL Policy
Construction Law: Berkeley Balcony Collapse Triggers New Proposed Contractor Law
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Read more: Construction Law: Berkeley Balcony Collapse Triggers New Proposed Contractor Law
Business Law: Forced To Binding Arbitration Even When Did Not Sign An Arbitration Clause
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The historical rationale for using arbitration clauses in contracts was that arbitration was perceived as a less expensive and faster way to resolve disputes.
Read more: Business Law: Forced To Binding Arbitration Even When Did Not Sign An Arbitration Clause
Construction Law: California Statute Prohibits Forcing Subcontractors to Litigate or Arbitrate in Remote Forum
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Contract provisions which seek to force a weaker party to litigate in a remote, inconvenient location are common. Those with greater financial resources (often the paying party rather than the performing party) use these types of provisions to discourage claims by those with less resources.
Construction Law: New Law Regarding Use of An Architect's Instruments of Service
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Assembly Bill (AB) 630 (Chapter 453, Statutes of 2013) took effect January 1, 2014, and provides that no individual may use an architect's instruments of service without the consent of the architect in a written contract, written agreement, or written license specifically authorizing that use. The bill added section 5536.4 to the Business and Professions Code (BPC) and was signed by Governor Brown on October 1, 2013.
Read more: Construction Law: New Law Regarding Use of An Architect's Instruments of Service
Business Law: Contracts - Call for Dispute Resolution in Local Jurisdiction
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Read more: Business Law: Contracts - Call for Dispute Resolution in Local Jurisdiction
Business Law: Trade Secret Definitions Must be Specific to be Enforceable
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Many agreements contain overbroad definitions of what is a trade secret, and require that you agree not to divulge or misuse those claimed trade secrets. Courts reviewing such broad clauses may refuse to enforce the trade secret portion of the agreements because the definition of trade secret in the agreement is too broad.
Read more: Business Law: Trade Secret Definitions Must be Specific to be Enforceable
Construction Law: Right to Repair Act (SB 800)
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Right to Repair Act, (SB 800) Not Exclusive Remedy In California For Construction Defects in Residential Housing
Since the Right to Repair Act, (SB 800) was passed in California, builders have hoped the laws would reduce the frequency and cost of defending claims for construction defects. In Liberty Mutual Insurance Company v. Brookfield Crystal Cove LLC, --- Cal.Rptr.3d————, 219 Cal.App.4th 98, 2013 WL 5494673 (Cal.App. 4 Dist.), a California appellate court addressed the applicability of SB 800, the California Right to Repair act, and found it was not a claimant’’s exclusive remedy for construction defects.
Construction Law: Forum Selection Clause
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Subcontractor Working on Hawaii Home Not Bound By Forum Selection Clause in Owner-Builder Contract Mandating California Jurisdiction for Claims Between Owner and Contractor
Reviewing the language of the contract documents, and what language may be incorporated by reference into your contract is critical. In Paul Ryan Associates v. Welch Marble and Tile, Inc., Not Reported in Cal.Rptr.3d, 2013 WL 5214038 (Cal.App. 1 Dist.) (2013), Not Officially Published, Paul Ryan Associates (Ryan Associates) appealed from an order quashing service of its cross-complaint against respondent Welch Marble & Tile, Inc. (Welch) in this construction defect action.