• CSC20logograyorangenoyear
  • Conference
      • About
        • About the Conference
        • Floor Plan / Sponsor List
        • Sponsors
        • FAQ
        • Contact Us
        • Health & Safety
      • Hotel & Travel
        • Hotel Accommodations
        • Travel Information
      • Attend
        • Why Attend?
        • Registration & Pricing
        • Conference Schedule
        • MCLE Accreditation
        • Speakers
        • Speaker Resources
      • Sponsor
        • Why Sponsor?
        • Sponsor / Inquire
        • Sponsor Resource Center
        • Sponsorship & Advertising
  • News
    • Latest News
  • Subscribe
    • Newsletter Signup
    • Show Updates
  • .
  • Conference
    • About
      • About the Conference
      • Floor Plan / Sponsor List
      • Sponsors
      • FAQ
      • Contact Us
      • Health & Safety
    • Attend
      • Why Attend?
      • Registration & Pricing
      • Conference Schedule
      • MCLE Accreditation
      • Speakers
      • Speaker Resources
    • Sponsor
      • Why Sponsor?
      • Sponsor / Inquire
      • Sponsor Resource Center
      • Sponsorship & Advertising
    • Hotel & Travel
      • Hotel Accommodations
      • Travel Information
  • News
    • Latest News
  • Subscribe
    • Newsletter Signup
    • Show Updates

December 4—6, 2023
Hilton Miami Downtown, Miami, FL

Register Sponsor / Inquire
Q
POPULAR SEARCHES
News + Features
News + Features
News + Features
News + Features
News + Features
News + Features

Latest News

June 14, 2022

Remember the Basics: Good Faith and Fair Dealing

NEWARK, N.J. - I learned to think of a contract as basically a handshake, though I am in no way saying that detailed contracts are not needed. In that regard, I always think of Robert Frost, and how “Good fences make good neighbors.”

Words by: Michael F. McKenna

Latest News
Ethics and Compliance | Latest News | News
June 14, 2022

Remember the Basics: Good Faith and Fair Dealing

NEWARK, N.J. - I learned to think of a contract as basically a handshake, though I am in no way saying that detailed contracts are not needed. In that regard, I always think of Robert Frost, and how “Good fences make good neighbors.”

Words by: Michael F. McKenna

NEWARK, N.J. – I learned to think of a contract as basically being a handshake, though I am in no way saying that detailed contracts are not needed. In that regard, I always think of Robert Frost, and how “good fences make for good neighbors.” My thought of the handshake simply goes down to keeping in mind that a contract is a mutual agreement.

We go into contracts knowing that there are mutual goals to be achieved. One side needs a highway that will be used by its taxpayers and will last for many years. The other side wants to build that highway and be paid a fair amount for its services. Simple.

Very few of us enter into a contract with the expectation of issues, let alone unanticipated issues. While this will inevitably lead to a discussion of risk shifting, I keep returning to the old-fashioned handshake. There was a time a decade or so ago that it was popular to use the term “partnering.” I like the concept, but for too many it turned into “whoever is the first to bring in an attorney is a jerk.”

In many states, my concept of the handshake is expressed in a legal theory referred to as the implied covenant of good faith and fair dealing. I really like this legal theory. It is simple. Treat each other fairly and act in good faith. Said like that – it does sound simple. It is in the application that this basic principle is tested.

We have recently gone through several tests. One was obviously the unexpected occurrence of Covid-19. Another was the unexpected occurrence of massive and substantial increases in the cost of materials and gasoline. To me, when these unexpected occurrences happen, we need to treat each other fairly and act in good faith. They happened and were not caused by either party. So, our analysis needs to move further and our behavior consider the unforeseen circumstances.

What happens if we look at what would have occurred if both parties knew at the time of entering into the contract that these events or changes would occur? This turns into a cost, risk and benefit analysis. For unexpected material increases it is a somewhat easier analysis. If both sides knew, then the contractor would have charged more and the owner would get and pay for the increased costs of materials.

The concept that there was a risk shifting and that the contractor should entirely bare this risk is simply not fair. Why should the contractor bear this risk? It is the owner that is getting the benefit of materials that cost more. Why should the owner get that windfall? It was not bargained for. The contractor was not in the position of adding substantial monies into its bid for unknown contingencies.

I recall case law that looks at this basic concept of understanding that a contractor cannot build large contingencies into its bid for the unknown. Indeed, the concept of placing large amounts of money into a bid for contingencies is just the opposite of what most owners want. The owners want the lowest bid, and not for the contractor to allocate monies into its bid for things that may or may not happen. If they do, then all is well. Then there is money in the contract to pay for unanticipated occurrences. But if they do not, then those unrealized contingencies becomes a windfall for the contractor – an unexpected gain/profit. This was some of the basic reasoning expressed by wise judges when the basics of law about differing site conditions was developed, which states that if something happens and the conditions are unexpected then the contractor should be paid for those unexpected site conditions.

For my two cents, I think that any of these circumstances need to be reviewed in this same manner. What is fair? I really don’t think that is too much to ask for parties to consider.

Michael F. McKenna is a partner at Cohen Seglias Pallas Greenhall & Furman PC, Newark, N.J. 

Ethics and Compliance•Latest News•News

SHARE

Share on Email
Share on Linkedin
Share on Facebook
Share on Pinterest
Share on Twitter
← Previous Article Next Article →
Latest News Latest NewsNews

Survey: Optimism Dims For Private Sector Construction

ARLINGTON, VA - Construction contractors are less optimistic about many private-sector segments than they were a year ago, but their expectations for the public sector market have remained relatively bullish.

Latest News Latest NewsNews

Analysis: Restrictive Covenants And Non-Competes

RIVER EDGE, N.J. - The legal landscape with regard to non-compete agreements and other types of restrictive covenants has been tenuous for decades.

Latest News Latest NewsNews

Survey: Optimism Dims For Private Sector Construction

ARLINGTON, VA - Construction contractors are less optimistic about many private-sector segments than they were a year ago, but their expectations for the public sector market have remained relatively bullish.

Latest News Latest NewsNews

No Non-Compete: Good Or Bad Idea?

WASHINGTON, D.C. – With the new year came a newly proposed “no non-compete” rule from the FTC.

Latest News Latest NewsNews

Images From CSC 2022

LAS VEGAS - The next CSC is scheduled for Dec. 4-6, 2023 in Miami, but first here is a look back at images from Vegas.

Latest News Latest NewsNews

CSC 2022 – Heightened Focus On Design Practice

LAS VEGAS - This year’s Construction Super Conference is now in the books, and it was excellent. It was one of the better ones, in fact, that I’ve been to in a while.

Latest News Latest NewsNews

CSC 2022 – Force Majeure, Supply Chain, And More

LAS VEGAS - I just attended another great Construction Super Conference event in Las Vegas. It certainly feels as though the “new normal” is “back to normal.”

Latest News Latest NewsNews

CSC 2022 Networking Opportunities Abound

LAS VEGAS – Educational sessions are top notch at Construction Super Conference (CSC), but attendance at CSC is also a great opportunity to solidify existing relationships and build new ones at stellar networking events.

SHOW INFORMATION

SIGN UP

Register now for the opportunity to connect with thousands of atttendees and vendors

Register
Sponsor / Inquire
FOLLOW US ON
  • Follow
  • Follow
  • Follow
© 2023 Emerald X, LLC. All Rights Reserved.

ABOUT    CAREERS    AUTHORIZED SERVICE PROVIDERS   TERMS OF USE   PRIVACY POLICY