CONSTRUCTION LAW IS NOT FAIR!

Cartoon of Lady Justice and business man with hardhat holding wilting flowers

Instead of using this inaugural blog to go right into specific legal issues, I wanted to address something about “the Law” that quite a few of my clients have said over the years: “That’s not fair!” In many cases, they were right— “the Law” was not fair. But “the Law” is not supposed to be fair; it is only supposed to be “just”. If you understand the difference now, you might save yourself from some costly mistakes.

“The Law” is actually a mash-up of different pieces of written laws and older court decisions which judges must later glue together in order to make a whole. Many laws begin with “statutes” passed by Congress or a State government. Policies and political agendas often govern what becomes a statute, particularly in construction, and they can be contrary to a contractor’s interests. State or Federal agencies can then tack on “regulations” to the statutes, which are another form of law, along with municipalities and other governmental bodies, all of whom have their own concerns. Still other rules and bits of law can also get thrown into the mix, including old court decisions. Judges are supposed to follow and interpret these laws. They may then generate a decision which follows “the Law” but still feels unfair—because it is.

For example, New Jersey’s public bidding laws generally require bidders to list designated subcontractors who will perform certain trade work. There are far too many instances where a bidder who offered the lowest overall bid price accidentally left out a trade subcontractor’s name. As a result, the bid was rejected as “non-responsive” or “materially irregular”. That’s not “fair” to the bidder who made an honest mistake, and it’s not fair to the taxpayers who have to now pay a higher price to the second lowest bidder because of it. It isn’t even fair to the subcontractor who could have gotten the job, but lost out due to the clerical error. Nevertheless, the law does not permit a post-bid correction of this type of mistake, no matter how good the proof of an accident may be. By doing so, the sanctity of the bidding process from even the appearance of favoritism, bias or corruption is protected. So, legal policy over-rides not just fairness but common sense.

Fairness does have a place in the law if you know where to look for it, and more often than not, it is where a judge’s hands are not tied by a host of written laws and regulations. By way of example, I was once asked at the last minute to file a lawsuit against a payment bond, and I arguably met a one year statute of limitations by about 10 hours. The other side disagreed with my calculations, of course, and filed a motion to dismiss the lawsuit by asserting the claim was barred by the statute of limitations. On the day the motion was to be heard by the judge, he called my adversary and myself into his chambers for one of those “closed door” conferences like you see on TV shows. What he told us was that he wanted to see contractors paid for the work they performed. So, if there was any possible way to apply “the Law” to find the lawsuit was timely filed, he would do so. We were then told to go out and settle the case, and over the next week, we did. That was fairness at work in the real world of construction lawyering.

Areas of particular danger to contractors are where there are lots of written laws outlining specific practices to be followed or acts to be taken, and there is a “protected class” or group which “the Law” was intended to protect. So, areas of concern include, for example, wages and hours disputes, labor laws, environmental protection, and any reconstruction or repair of a single family home, condo or co-op. There is also some legislation protecting contractors, like their rights to prompt payment and lien laws. You just have to follow them carefully to get their full benefit. 

Knowing whether something is “just” as well as “fair” requires a healthy knowledge of the legal policies and issues which go into the subject. As with most things, it is better to find out before you commit yourself to a mistake than after the deed it done. And that’s not an unfair approach to a potentially unfair problem.