This is the second of Mr. Ittig’s questions. What happens legally with an unsigned contract.
~Peter
Situation 2: Fair compensation
The construction manager sends you a subcontract. You reply, without signing, with a three-page list of the terms you think are unacceptable. However, you proceed with the work and get paid. Halfway through the job, the owner proposes to replace the construction manager and sends you his own contract form. You do not sign it but respond with a four-page list of proposed modifications. You continue to work to completion. During the job, you sent regular notices of claims for extra work.
A. Your claims are against the construction manager for the first half of the project and against the owner for the second half.
B. By objecting to the contracts and not signing them, all of your work is billable on a cost-plus basis.
C. All of your claims are recoverable from the owner.
D. By performing the work without resolving your objections, you accepted the contract as is.
Replies
I'm gonna' say "D", but I guess I'll have to ask Gerry & Judith Ittig in person..........since they ARE my lawyers!
Gerry especially is pretty funny.
Hey, these are getting harder.
There is a ton of needed info in these scenarios - but in the spirit of how they were presented - -
I'm going to say D.
Remodeling Contractor just on the other side of the Glass City
Trick question. The correct answers are D, A, and C.
D) because when you took the first payment, and all subsequent payments for work under the original contract, you "validated" it.
A) because that is the way you present CO billing. Bill the guy you have a contract with.
C) because liens are against the land and all liens are recoverable from the owner of the land.
If you wind up in court, the judge may select B) because you were an idiot but you did do the work and you deserve something, and he is gonna determine the + in Cost Plus..
SamT
Edited 7/31/2007 7:07 pm by SamT
If you end up in court your lawyers will negotiate how much your worth using Quantum Meruit. Then they will split your money and you will get nothing.
Jason
The first part of the scenario is actually rather common, I have known contractors who have done just this. IMO it is far better to just walk away but many find it hard to turn down work. Some contracts/subcontracts are so deadly they should never be signed. There are contractors that specialize in bankrupting their subs and their method is a contract so devious and stilted that those who sign them are essentially giving their companies to the GC or management company. As a GC, I was asked by subs I was friendly with, to review such contracts. That anyone would sign such a contract was hard to understand other than they really don't understand what they are signing. On the other hand even AIA contracts are highly favorable for the owner so we all sign bad contracts just that some are far worse than others.
Rule of thumb: If the contract is unacceptable than don't sign it. IMO if neither party signs and work proceeds there still is a verbal contract which is legally binding. Work must be done per the documents: Plans, specs, addendum, approved submittals etc. The project then with no signed contract and written objections would fall under general State contract law which,should a dispute occur would be far better than a killer contract/subcontract. If extra work is done under the supervision of the CM or GC and it is documented it is likely the contractor would be paid in Arbitration or court.
A. What a mess
B You are an idiot to do additional work without a signed CO, proceed order and no signed contract, consider a less demanding line of work
C The owner is responsible for the work done under the portion he verbally agreed to and for the earlier work also but first you have to try to collect from the fired CM. Though this would depend on who wrote you the check the owner or CM and how the project is set up
D No, but I reiterate, you are an idiot.
I do a fair amount of construction litigation. The answer is none, some or most of the above, but almost certainly not B.
Generally, for a contract to exist, there must be an offer and an acceptance.
The construction manager sends you a subcontract. This is an offer
You reply, without signing, with a three-page list of the terms you think are unacceptable. This is a counter-offer, not an acceptance. No contract so far.
However, you proceed with the work. By not stopping you, this may be an acceptance by the construction manager of your counteroffer. But, did you have any conversation or communication with the construction manager? If so, who said what? Perhaps he told you your counteroffer was unacceptable and you went ahead with the work anyway, thus accepting his original offer.
If there was never a contract, you will be entitled to some compensation, representing the fair and reasonable value of the work, which will itself be the subject of considerable dispute.
And so on. On behalf of your lawyer and the construction manager's lawyer, thank you for providing each with the opportunity to buy a bigger boat. The likely fee will be $99,999.50, plus an additional $99,999.50 for experts to testify as to fair value.