What do Client Eastwood and Lucy Lady-Duff Gordon have to do with construction contracts? Not much. But, they did play a critical role as parties to two classic cases which explain how implied obligations in contracts function. Written contracts contain any number of express terms, i.e. terms which are included in the written document typically referred to as the "contract." However, all contracts carry additional, unwritten obligations, covenants, and warranties! These unwritten requirements can be critical for understanding not only the risks that exist during construction but also the warranty risks that can persist for many years after the project is complete.
Implied obligations are recognized in all fifty states. While all contracts have some implied obligations, construction contracts actually have several unique obligations-like the implied warranty of plans and specifications. Due to this reasons, businesses that are engaged in construction or supply materials to owners, builders or designers, have to be particularly aware of the risks they are assuming. Many clients are surprised to learn that construction contracts may imply unique and different obligations than other contracts.
Implied obligations come in several different categories. Some are implied because the law assumes the obligation was so obvious the parties just assumed it was understood. Others are implied because without the obligation the purpose of the contract would be frustrated. For example, most-but not all-states imply a duty of good-faith and fair dealing on all parties. Even in states like Texas which does not always imply the obligation of good faith, the parties are held to certain implied obligations like the duty to act reasonably prompt and the duty not to interfere with or prevent another party performing its work on the project.
The history of implied obligations in construction contracts is peppered with some very unique and important cases. For example, the Spearin Doctrine dates to a famous Supreme Court case in the early 1900's where the Supreme Court held when a builder builds according to detailed plans and specifications the builder is not responsible for any failure. From this case has developed several implied obligations and warranties.
Join this session by expert speaker Zach Jones to gain a valuable understanding of Implied Obligations. Learn its history and purpose and identify what common implied obligations, covenants and warranties exist in construction contracts.
Who Should Attend
Zach Jones is a construction attorney in Louisville, Kentucky, with the firm of Stites & Harbison who represents contractors across the country and around the world. Prior to becoming an attorney, Zach was a project engineer and estimator for W.L. Hailey & Company (now Layne, ENR Top 400 #53). Havin... More info