Civil Engineering Chapter 22 Have Emphasized That Termination Very Serious Step This Why Subtitle

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Chapter 22

We have emphasized that termination is a very serious step. This is why we

sub-title Chapter 22 as “Sometimes necessary but always costly.” We think it

would be useful to see if the students “got the word” by asking them to debate

22.1, it may be very difficult to determine (from a factual standpoint) whether

grounds exist for termination exists. Why would the design professional be in a

better position to know? Suppose the contractor believes defects or ambiguities

in the design contributed to the project’s problems?

14.2.2, requires the architect or any Initial Decision Maker (IDM) to certify “that

sufficient cause exists to justify such action.” No similar requirement exists for

a termination by the contractor.

…

The requirement for such an architect certification and the interrelationship

between contractual and common law termination came before the court in

Ingrassia Construction Co. v. Vernon Township Board of Education, 345 N.J.Super.

130, 784 A.2d 73 (App.Div.2001). The parties used A201, very likely the

edition issued in 1987. However, the parties deleted the arbitration provision.

The board sought to terminate the contract based upon the contractor’s failure

to meet time milestones and to comply with quality requirements. It requested

that milestone dates had not been met, but not that this was a substantial

breach or sufficient ground for termination.

The court upheld the determination by the trial judge that the certificate was

defective, as it did not certify what was required under old Paragraph 14.2.2

(The trial judge pointed to the fact that the architect was unlicensed.) The

That the certificate was defective, held the court, did not deprive the board of

its common law right to claim that it had proper grounds to terminate the

contractor. It pointed to old Paragraphs 13.4.1 and 14.2.2 that state the

contractual remedies are not exclusive. The court concluded that a proper

certificate is not a condition precedent to the board’s exercise of its common

law rights. The board’s traditional burden to establish a material breach would

have been largely exempted by the issuance of a proper certificate. The court

did not have to decide how much finality to extend to a proper certificate, but it

seems clear that issuance would have been very beneficial to the board.

The case raises many questions. Would a proper certificate by an unlicensed

architect have been valid? The trial court seemed troubled by this, but the

appellate court was not. It did not have to address this issue, as it was clear

What of the architect’s refusal to give the certificate because he had no personal

knowledge? This would not accord with the intention of the parties. They knew

the architect was not on the site every day. More likely, the architect should

have conducted an investigation of the type specified in old Paragraph 4.3

dealing with claims. (Perhaps his unwillingness to do so was based upon his

unlicensed status.)

The Ingrassia court held that the school board’s failure to obtain its architect’s

certificate simply meant that the board’s right to terminate must be under the

common law. Contrast this with Town of Plainfield v. Paden Eng’g Co., 943

N.E.2d 904 (Ind.App.2011), holding that the town’s termination of the contractor

for default was wrongful where the town did not obtain an architect certification

as required by the AIA contract.

Do contractors benefit from a quicker resolution? Do they understand they are

giving up their common law rights? (The largest effect tends to be whether

compensation under a termination for convenience includes lost profits.) If the

owner’s termination was wrongful—meaning the owner was in breach of

Ask the students: Should the presumption of freedom of contract extend to an

owner’s right to terminate so long as the contractor is entitled to a remedy?

Would their view change if the contractor was entitled to a (quicker) contract

remedy which was less generous than what would be available under the

common law?

Answers to Chapter Questions

1.) What are the legal requirements to “unmake” or rescind a contract?

2.) Under the Federal Acquisition Regulations, when may the government terminate the

contract completely or partially?

3.) What are the similarities and differences between the provisions of the AIA and the

EJCDC in regard to owner’s termination of the prime contract?

4.) Which parties in a construction contract can terminate for convenience?

5.) What are some grounds for the contractor to terminate the contract under the AIA

A201–2007 Document?

6.) What is the concept of constructive convenience termination under federal

procurement law?

a. Federal procurement law has developed the concept of constructive

convenience termination. Under it, a contract with a convenience

termination clause converts a wrongful government default termination into

a convenience termination.

7.) What did the court state in DeVito v. United States was necessary for the government

to reinstate a firm completion date and revive the right to terminate after the

project had already exceeded the original completion date and the owner had not

yet exercised their right to terminate?

8.) What are the three possible uses of the notice period when a party has been notified

of a termination?

9.) According to the Restatement (Second) of Contracts § 241, what are the significant

factors in determining whether a particular breach is material?

(5) whether the nonperforming party acted in conformity with the

standards good faith and dealing.

10.) What is a breach by anticipatory repudiation?