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Claims Administration and Procedure Under the AIA and EJCDC

Adrianne Huffman Chillemi September 19, 2008

EJCDC 

1. Reference to ³EJCDC´ is to the Engineers Joint Contract Document Committee of the National Society of Professional Engineers 1.1 EJCDC General Conditions is form C-700 C- 

AIA 

2. Reference to ³AIA´ is to The American Institute of Architects 2.1 General Conditions is AIA Document A201 ± 2007 

³CLAIM´ ´ 

3. ³Claim´ Defined 3.1 EJCDC General Conditions, Paragraph 1.01A 11. Claim - A demand or assertion by OWNER or CONTRACTOR seeking an adjustment of Contract Price or Contract Times, or both, or other relief with respect to the terms of the Contract. A demand for money or services by a third party is not a Claim.  



3.2 AIA-201 General Conditions, AIASection 15.1.1 Definitions A Claim is a demand or assertion by one of the parties seeking, as a matter of right, payment of money or other relief with respect to the terms of the Contract. The term "Claim" also includes other disputes and matters in question between the Owner and Contractor arising out of or relating to the Contract. The responsibility to substantiate Claims shall rest with the party making the Claim. 

and 4.2 Changes to plans.1.1. 4.1. 4.1.1 Owner caused: 4.1.OWNER CAUSED CLAIMS  4.3 Delays.6 Delay or Failure to Make Payment       .1 Additions to plans.5 Interference 4. 4.4 Misrepresentations.1. Reasons for Claims arising under construction contracts 4.

2 Environmental 4.2.2 Weather delays 4.1 Prime Contractor Delays 4.3.2.ENVIRONMENTAL CLAIMS       4.3 Other 4.1 Unexpected site conditions 4.2.2 Subcontractor Delays .3.

Continuance of Work . 5.

 . Paragraph 6. except as permitted by paragraph 15.1 EJCDC General Conditions. No Work shall be delayed or postponed pending resolution of any disputes or disagreements. CONTRACTOR shall carry on the Work and adhere to the progress schedule during all disputes or disagreements with OWNER.18 Continuing the Work A. 5.04 or as OWNER and CONTRACTOR may otherwise agree in writing.

Section 15. The Architect will prepare Change Orders and issue Certificates for Payment in Accordance with the decisions of the Initial Decision Maker.7 and Article 14. the Contractor shall proceed diligently with performance of the Contract and the Owner shall continue to make payments in accordance with the Contract Documents.1. final resolution of a Claim.  . except as otherwise agreed in writing or as provided in Subparagraph 9.1.3.2 AIA General Conditions.4 and 15. 5.1. Pending Performance. 15.5 Continuing Contract Performance.

4.4.AIA General Conditions. . Section 15. Claims for Additional Cost  If the Contractor wishes to make a Claim for an increase in the Contract Sum. written notice as provided herein shall be given before proceeding to execute the Work. Prior notice is not required for Claims relating to an emergency endangering life or property arising under Section 10.1.

5.1. only one Claim is necessary. Claims for Additional Time If the Contractor wishes to make Claim for an increase in the Contract Time. The Contractor¶s Claim shall include an estimate of cost and of probable effect of delay on progress of the Work. Section 15.  . In the case of a continuing delay.1.AIA General Conditions. written notice as provided herein shall be given.

Claims for Additional Time/Weather-Related Time/Weather-  If adverse weather conditions are the basis for a Claim for additional time. could not have been reasonably anticipated and had an adverse effect on the scheduled construction. . Section 15.1.2.5. such Claim shall be documented by data substantiating that weather conditions were abnormal for the period of time.AIA General Conditions.

  . Notice: Written notice stating the general nature of each Claim.05 A. or other matter shall be delivered by the claimant to ENGINEER and the other party to the Contract promptly (but in no event later than 30 days) after the start of the event giving rise thereto.1 EJCDC General Conditions. Paragraph 10. dispute. 6.NOTICE  6. Notice of a Claim.

dispute. or other matter) . dispute. Notice of the amount or extent of the Claim. or other matter with supporting data shall be delivered to the ENGINEER and the other party to the Contract within 60 days after the start of such event (unless ENGINEER allows additional time for claimant to submit additional or more accurate data in support of such Claim.

.05. No Claim for an adjustment in Contract Price or Contract Times (or Milestones) will be valid if not submitted in accordance with this paragraph 10. D.

2 AIA-201 General Conditions.1 Concept of ³reserving´ a Claim versus ³real-time´ Claims ³real-   .2 Notice of Claims. 6. 6. AIASection 15. whichever is later. Claims by either Claims.1.2. the Owner or the Contractor must be initiated by written notice to the other party and to the Initial Decision Maker. Claims by either party must be initiated within 21 days after occurrence of the event giving rise to such Claim or within 21 days after the claimant first recognizes the condition giving rise to the Claim.

 6.3 Does failure to give timely written notice in accordance with the terms of the contract bar a Claim under North Carolina law? .

Donohoe Companies. e.E. 2d 452 (1976) (denying a contactor¶s claim for additional work for failure to give written notice to the contracting authority even though the contracting authority was on actual notice of the unanticipated conditions). 556 S.E. App 239. State Highway Comm¶n. Blankenship Constr.C. which required compliance with the written notice provision of the contract because: . App.3.1 Generally. 147 Companies. v. 222 S. See also Biemann and Rowell v. 6. Co. See. Comm¶n. 2d 1 (2001).g. 28 N. 593.C. N.

and failure to give proper notice was a breach of [Biemann¶s] duty to mitigate damages and prejudiced the other party¶s ability to cure any problem.   . acceptance of final payment was a waiver of a Claim under the general conditions of the contract. failure to give proper notice to the architect prevented the architect from performing as an arbiter of disputes.

. of Admin. 2d 463 (1995) (apparently relaxing the notice requirements in the public contracting area). Davidson and Jones. v. Admin. Inc.. . 337 S. 315 N. 144. But see.C.E. Dept.C. N.

3.WAIVER OF NOTICE  6.2 Can the contract¶s notice requirements be waived? .

2d 346 (1984). County.´ W.E.E.C. Son-Shine Grading v. Trading Post.C. App 482. Randolph County. 2d 512 (1975) quoting J. 212 S.3. or by conduct which naturally and justly leads the other party to believe the provisions of the contract are modified or waived. 247 N. Graham v. 544N. App. Garrison Grading v. Caswell County.2.C. ADC SonConstruction. 2d 808 (1982). 291 S. 6. 544-45 County.E. See also Childress v. 100 S. 150. 417.E. Piracci Construction. 57 N.27 N.E.C. Construction.C. 1975).1 It has been well-established in wellNorth Carolina that ³[t]he provisions of a written contract may be modified or waived by a subsequent parol (oral) agreement.E. 68 N. 2d391 (1957). Triangle Air v. 2d 542.R. Post. . App.27 S. 315 S. 725. 221 Construction. App.

3 What if a contract may only be amended in writing? . 6.3.

Paragraph 3.  .3. or (iii) a Work Change Directive.1 EJCDC General Conditions. and revisions in the Work or to modify the terms and conditions thereof in one of more of the following ways: (i) a Written Amendment. 6.04 A.3. (ii) a Change Order. The Contract Documents may be amended to provide for additions. deletions.

by one or more of the following ways: (i) a Field Order. and minor variations and deviations in the Work may be authorized. or (iii) ENGINEER¶s written interpretation or clarification. . The requirements of the Contract Documents may be supplemented. B. a (ii) ENGINEER¶s approval of a Shop Drawing or Sample.

 6.1.3.2 AIA -201 General Conditions.2 The Contract .3. Section 1.

The Contract may be amended or modified only by a Modification. The Contract Documents form the Contract for Construction. either written or oral. representations or agreements. The Contract Documents shall not be construed to create a contractual relationship of any kind . The Contract represents the entire and integrated agreement between the parties hereto and supersedes prior negotiations.

(2) between the Owner and a Subcontractor or a SubSubsubcontractor. (3) between the Owner and the Architect or the Architect¶s consultants or   . (1) between the Contractor and the Architect or the Architects Consultants.

be entitled to performance and enforcement of obligations under the Contract intended to facilitate performance of the Architect¶s duties. The Architect shall. however. . (4) between any persons or entities other than the Owner and the Contractor.

  Paragraph 1. (2) a Change Order.1 ««.  . (3) a Construction Change Directive or (4) a written order for a minor change in the Work issued by the Architect.A Modification is (1) a written amendment to the Contract signed by both parties.1.

modification or amendment has to be in writing by the contract terms. Nello Teer Company. 54 S. supra. See in particular General Specialties Company v. Company.3. Graham. See Garrison and Graham. . 2d 658 (1979). 273.C.3. 41 N.3 Waiver can occur by oral agreement or conduct even where a change. App.E.WAIVER  6.

of Nello Teer orally agreed to the off-site offstorage. .P. The Court concluded the written notice provision had been waived because an Assistant V. Nello Teer refused the claim because written notice was not given within 72 hours of the claim arising as provided in their contract. General incurred additional off-site offstorage costs and submitted a claim to Nello Teer.

3.3.4 How can this apparent contradiction in court decisions be reconciled? . 6.

4 How can notice issues be avoided? 6.4.1 THE PARTIES SHOULD BE ADVISED TO READ AND STRICTLY COMPLY WITH THE NOTICE PROVISIONS OF THE CONTRACT BEFORE THE WORK IS COMMENCED  . 6.

4. 6.2 If a contractor has not strictly complied with the notice provisions. then as soon as possible the contractor should make a Claim in writing by including the following: a.  . A recital of the specific contract provisions being relied upon in the contract.

Identify and describe the extra work that is. Set forth the facts upon which the contractor relied showing that the owner had knowledge or directed the work be performed. State the facts regarding the authority or the apparent or actual authority of the representative who directed the work be performed. d. c. b.   . was or will be performed.

f. e. State any facts which suggest the Owner ratified its representative¶s directions. State any facts that indicate the owner had actual knowledge that the contractor claimed the work to be extra work prior to the contractor performing.  .

 . State any facts which suggest the contractor performed the disputed work under protest and reserved its rights to be paid or have the contract amended or modified at a later date. and h. g. Consult with an attorney.

1.05   . Paragraph 10. Claim Resolution 7.1 Claims generally have to first be submitted to the Engineer/Architect in accordance with the terms of the contract between the owner and contractor.CLAIM RESOLUTION  7.1 EJCDC General Conditions. 7.

Notice: Written notice stating the general nature of each Claim. or other matter shall be delivered by the claimant to ENGINEER and the other party to the Contract promptly (but in no event later than 30 days) after the start of the event giving rise thereto. dispute. A. .

or other matter). dispute. or other matter with supporting data shall be delivered to the ENGINEER and the other party to the Contract within 60 days after the start of such event (unless ENGINEER allows additional time for claimant to submit additional or more accurate data in support of such Claim. Notice of the amount or extent of the Claim. dispute. .

A Claim for an adjustment in Contract Time shall be prepared in accordance with the provisions of paragraph 12.02B. Each Claim shall be accompanied by claimant¶s written statement that the adjustment claimed is the entire adjustment to which the claimant believes it is entitled as a result of said event.01B. . A Claim for an adjustment in Contract Price shall be prepared in accordance with the provisions of paragraph 12.

 The opposing party shall submit any response to ENGINEER and the claimant within 30 days after receipt of the claimant¶s last submittal (unless ENGINEER allows additional time). .

excluding those arising under Sections 10.2.  . Claims.1. unless otherwise indicated in the Agreement.10. shall be referred to the Initial Decision Maker for initial decision.2 AIA-201 General AIAConditions. 7.1. 11. The Architect shall serve as the Initial Decision Maker. Section 15.3.3. 10.3. Initial Decision 15. and 11.9.2.4.

 Except for those Claims excluded by this Section 15. . Unless the Initial Decision Maker and all affected parties agree the Initial Decision Maker will not decide disputes between the Contractor and persons or entities other than the Owner. unless 30 days have passed after the Claim has been referred to the Initial Decision Maker with no decision having been rendered.2. an initial decision shall be required as a condition precedent to mediation of any Claim arising prior to the date final payment is due.1.

2 The Initial Decision Maker will review Claims and within ten days of the receipt of the Claim take one or more of the following actions: (1) request additional supporting data from the claimant or a response with supporting data from the other party.2. .15.

 (2) reject the Claim in whole or in part. or   . (4) suggest a compromise. (3) approve the Claim.

 (5) advise the parties that the Initial Decision Maker is unable to resolve the Claim if the Initial Decision Maker lacks sufficient information to evaluate the merits of the Claim or if the Initial Decision Maker concludes that.  . it would be inappropriate for the Initial Decision Maker to resolve the Claim. 7. in the Initial Decision Maker ¶s sole discretion.2 Party making the claim has the burden of proof (of convincing) the Initial Decision Maker .

3. 7.1 EJCDC General Conditions. Paragraph 10.3 Decision by Architect/Engineer  7.05 .

dispute or other matter will be final and binding upon OWNER and CONTRACTOR unless: . if any.  B. ENGINEER¶s Decision: ENGINEER will render a formal decision in writing within 30 days after receipt of the last submittal of the claimant or the last submittal of the opposing party. ENGINEER¶s written decision on such Claim.

an appeal from ENGINEER¶S decision is taken within the time limits and in accordance with the dispute resolution procedures set forth in Article 16. or . 1.

if no such dispute resolution procedures have been set forth in Article 16. and . a written notice of intention to appeal from ENGINEER¶s written decision is delivered by OWNER or CONTRACTOR to the other and to ENGINEER within 30 days after the date of such decision. 2.

. or other matter in accordance with applicable Laws and Regulations. a formal proceeding is instituted by the appealing party in a forum of competent jurisdiction. to exercise such rights or remedies as the appealing party may have with respect to such Claim. whichever is later (unless otherwise agreed in writing by OWNER and CONTRACTOR). within 60 days after the date of such decision or within 60 days after Substantial Completion. dispute.

 C. If ENGINEER does not render a formal decision in writing within the time stated in paragraph 10.05B. . a decision denying the Claim in its entirety shall be deemed to have been issued 31 days after receipt of the last submittal of the claimant or the last submittal of the opposing party. if any.

AIASection 15.5 The Initial Decision Maker will render an initial decision approving or rejecting the Claim.2 15. 7.2. and (3) notify the parties and the Architect. of any change in the Contract Sum or Contract Time or both.3. (2) state the reasons therefor.2 AIA-201 General Conditions. This initial decision shall (1) be in writing.     . or indicating that the Initial Decision Maker is unable to resolve the Claim. if the Architect is not serving as the Initial Decision Maker.

. to binding dispute resolution. The initial decision shall be final and binding on the parties but subject to mediation and. if the parties fail to resolve their disputes through mediation.