Deal…or No Deal? Identifying and Addressing Gray Areas in Construction Contracting

This article, co-written by Gentry Locke attorneys Brett Marston, Spencer Wiegard, Josh Johnson, and Abigail Murchison, was published in The Construction Lawyer, Journal of the ABA Forum on the Construction Industry, Volume 33 No. 3 (Summer 2013).A version of this article with a Virginia focus first appeared in 2006. See K. Brett Marston and J. Barrett Lucy, “Deal or No Deal? Clarifying Gray Areas in Construction Contracting,” Virginia Lawyer, Vol. 55, No. 3 (October 2006).

>>> Viewed the published article here.

Following are section headings from the article:

“Let’s Make a Deal… to Make a Deal.”

One of the murkiest areas of construction contracting surrounds the back-and-forth between general contractors and subcontractors on and just after bid day. Subcontractors bidding on a particular scope of work on a project often submit their price quotation, or quotes, to more than one general contractor. For every subcontractor, there is a different quote document, containing differing verbiage. Those quotes are often transmitted a very short time before the general contractor has to compile quotes from many subcontractors with its own numbers to submit a bid for the overall project. General contractors may even communicate with representatives from particular subcontractors about the contents and viability of the quote. With their bid submissions, general contractors often have to list the subcontractors they intend to employ if successful in obtaining the contract.

• The General Camps of State Decisions
• Reasons General Contractors Do Not Recover
• Policy Considerations
• Letters of Intent
• A Handshake…and a Prayer
• Does an Agreement Exist if at Least One Party Has Not Signed?
• What are the Terms of the Agreement?
• Acceptance of Terms by Doing the Work
• What if There is no Agreement, Written or Unwritten, Between the Parties?
• Change Order Two-Step: Enforceability of Unsigned Change Orders in Private Contracts
• Various Theories of Recovery
• Varying Thresholds of Proof
• Typical Fact Patterns
• Conclusion

While it is easy to identify these issues and predict that they will continue to occur for as long as there are construction projects, it is more difficult to predict their outcomes and to fully prepare clients to perform preventative maintenance. The details of the conversations, directions, promises and “deals” all factor into the analysis of whether there is a binding agreement and what the terms are. Communication and documentation of a party’s understanding is essential to trying to establish whether there really is “a deal . . . or no deal.”