Legal Aspects of Architecture, Engineering and the Construction Process

1089 Pages·13.567 MB·English

by  Sweet J., Schneier M.

Engineering and the
Construction Process
E I G H T H E D I T I O N
Justin Sweet
John H. Boalt Professor of Law Emeritus
University of California (Berkeley)
Marc M. Schneier
Editor, Construction Litigation Reporter
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Legal Aspects of Architecture, Engineering and © 2009, 2004, 2000 Cengage Learning
the Construction Process, Eighth Edition
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Justin Sweet and Marc M. Schneier
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Printed in the United States of America
1 2 3 4 5 6 7 12 11 10 09 08
To my wife, Sheba
—Justin Sweet
To my family
—Marc M. Schneier
This page intentionally left blank
Contents
Preface xxi 2.09 Pretrial Activities: Discovery 13
2.10 The Jury 13
Credits xxvii 2.11 Trials: The Adversary System 14
2.12 Judgments 15
2.13 Enforcement of Judgments 16
CHAPTER ONE
2.14 Appeals: The Use of Precedent 16
Sources of Law: Varied and Dynamic 1
2.15 International Contracts 17
1.01 Relevance 1
1.02 The Federal System 1
CHAPTER THREE
1.03 Constitutions 2
1.04 Legislation 3 Forms of Association: Organizing to
1.05 The Executive Branch 4 Accomplish Objectives 18
1.06 Administrative Agencies 4
1.07 Courts: The Common Law 5 3.01 Relevance 18
1.08 Contracting Parties 5 3.02 Sole Proprietorships 18
1.09 Publishers of Standardized Documents 5 3.03 Partnerships 18
1.10 Restatements of the Law 6 A. Generally: Uniform Partnership Act 18
1.11 Summary 6 B. Creation 19
C. Operation 19
D. Fiduciary Duties 19
CHAPTER TWO E. Performance Obligations, Profi ts, Losses,
The American Judicial System: A Forum Withdrawal of Capital and Interest 19
F. Authority of Partner 20
for Dispute Resolution 7
G. Liability of General Partnership and
2.01 State Court Systems: Trial and Appellate Individual Partners 20
Courts 7 H. Transferability of Partnership Agreement 20
2.02 The Federal Court System 8 I. Dissolution and Winding Up 20
2.03 Statute of Limitation: Time to Bring J. Limited Partnership 20
the Lawsuit 8 3.04 Profi t Corporations 21
2.04 Hiring an Attorney: Role and Compensation 8 A. Use 21
2.05 Jurisdiction of Courts 10 B. General Attributes 21
2.06 Parties to the Litigation 11 C. Preincorporation Problems: Promoters 21
2.07 Prejudgments Remedies 11 D. Share Ownership 21
2.08 Pleadings 12 E. Piercing the Corporate Veil 21
v
VI CONTENTS
F. Activities, Management, and Control: 5.04 Contract Classifi cations 33
Insider Misconduct 22 A. Express and Implied 33
G. Profi ts and Losses 23 B. Subject Matter 33
H. Life of the Corporation 23 C. Bargain and Adhesion 33
3.05 Nonprofi t Corporations 23 5.05 Capacity to Contract 34
3.06 Professional Corporations, Limited Liability 5.06 Mutual Assent 34
Companies (LLC), and Limited Liability A. Objective Theory of Contracts:
Partnerships (LLP) 24 Manifestations of Mutual Assent 34
3.07 Joint Ventures 24 B. Offer and Acceptance in the Assent
3.08 Unincorporated Associations 24 Process 35
3.09 Loose Associations: Share-Offi ce C. Contracts by Correspondence 36
Arrangement 25 D. Reasonable Certainty of Terms 37
3.10 Professional Associations 25 E. A More Formal Document: Preliminaries 37
F. Agreements to Agree 37
G. Agreements to Negotiate in Good Faith 38
CHAPTER FOUR H. Memorandum of Understanding 38
I. Letter of Intent 38
The Agency Relationship: A Legal
5.07 Defects in the Mutual Assent Process 39
Concept Essential to Contract
A. Fraud and Misrepresentation: Duty to
Making 27 Disclose 39
B. Economic Duress 39
4.01 Relevance 27
C. Mistake 39
4.02 Policies Behind Agency Concept 27
D. Unconsionability 40
A. Commercial Effi ciency and Protection of
E. Formation Defects and Restitution 40
Reasonable Expectations 27
5.08 Consideration as a Contract Requirement 41
B. Relationships Between Principal and
A. Defi nition 41
Agent 28
B. Reliance 41
4.03 Other Related Legal Concepts 28
5.09 Promises Under Seal 41
4.04 Creation of Agency Relationship 28
5.10 Writing Requirements: Statute of Frauds 42
4.05 Actual Authority 29
A. History 42
4.06 Apparent Authority 29
B. Transactions Required to Be Evidenced
4.07 Termination of Agency 30
by a Suffi cient Memorandum 42
4.08 Disputes Between Principal and
C. Suffi ciency of Memorandum 42
Third Party 30
D. Avoiding the Writing Requirement 43
4.09 Disputes Between Agent and Third Party 31
4.10 Non-Traditional Project Delivery Systems 31
CHAPTER SIX
Remedies for Contract Breach: Emphasis
CHAPTER FIVE
on Flexibility 44
Contracts and Their Formation:
Connectors for Construction 6.01 An Overview 44
6.02 Relationship to Other Chapters 44
Participants 32
6.03 Judicial Remedies: Money Awards, Specifi c
5.01 Relevance 32 Decrees, and Declaratory Judgments 45
5.02 The Function of Enforcing Contracts: 6.04 Compensation and Punishment: Emergence of
Freedom of Contract 32 Punitive Damages 46
5.03 Preliminary Defi nitions 32 6.05 Protected Interests 46
CONTENTS vii
6.06 Limits on Recovery 47 E. Duty 61
A. Causation 47 F. Protected Interests and Emotional
B. Certainty 47 Distress 62
C. Foreseeability: Freak Events and G. Defenses 63
Disproportionate Losses 47 Acceptance Doctrine 63
D. Avoidable Consequences (The Concept Assumption of Risk 64
of Mitigation) 48 Contributory Negligence 64
E. Lost Profi ts 48 Independent Contractor Rule 64
F. Collateral Source Rule 48 7.04 Nonintentional Nonnegligent Wrongs: Strict
G. Contractual Control: A Look at the Liability 65
UCC 49 A. Abnormally Dangerous Things and
H. Noneconomic Losses 49 Activities 65
6.07 Cost of Dispute Resolution: Attorneys’ B. Vicarious Liability 65
Fees 50 C. Employment Accidents and Workers’
6.08 Interest 51 Compensation 66
D. Product Liability 67
7.05 Claims by Third Parties 67
CHAPTER SEVEN
A. Lost Consortium 67
Losses, Conduct, and the Tort System: B. Survival and Wrongful Death Statutes 68
7.06 Immunity 68
Principles and Trends 52
A. Charitable Organizations 68
7.01 Relevance to the Construction Process 52 B. Employers and Workers’ Compensation 68
7.02 Tort Law: Background 52 C. Public Offi cials 68
A. Defi nition 52 D. Sovereign Immunity 68
B. Function 52 7.07 Misrepresentation 69
C. Threefold Classifi cations 53 A. Scope of Discussion 69
D. Historical Patterns 53 B. Representation or Opinion 69
E. General Factors in Determining Tort C. Conduct Classifi ed 69
Liability 55 D. Person Suffering from Loss 69
F. Coverage of Chapter 55 E. Type of Loss 70
7.03 Negligence: The “Fault” Concept 56 F. Reliance 70
A. Emergence of the Negligence G. Generalizations 70
Concept 56 7.08 Premises Liability: Duty of the Possessor
B. Elements of Negligence 56 of Land 70
C. Standard of Conduct: A. Relevance 70
The Reasonable Person 56 B. To Passersby 71
The Objective Standard and Some C. To Trespassing Adults 71
Exceptions 56 D. To Trespassing Children 72
Unreasonable Risk of Harm: Some E. To Licensees 72
Formulas 56 F. To Invitees 72
Common Practice: Custom 57 G. Movement Toward General Standard of
Violations of or Compliance with Statutes 57 Care 73
Res Ipsa Loquitur 58 H. Defenses to Premises Liability 73
D. Legal Cause: Cause in Fact and Proximate 7.09 Product Liability 73
Cause 59 A. Relevance 73
Cause in Fact 59 B. History: From Near Immunity to Strict
Proximate Cause 60 Liability 74
VIII CONTENTS
C. Restatement (Second) of Torts Section 402A CHAPTER NINE
and Restatement (Third) of Torts: Products
Limits on Ownership: Land Use
Liability Section 2 74
Controls 93
D. Product Misuse 76
E. Parties 76
9.01 Nuisance: Unreasonable Land Use 93
F. Defenses 77
9.02 Soil Support 94
G. Economic Losses 78
9.03 Drainage and Surface Waters 94
H. Disclaimers 79
9.04 Easements for Light, Air, and View 95
I. Design Defects and Duty to Warn:
9.05 Restrictive Covenants: Common Interest
Two Restatements 79
Communities (CIC) 96
J. Government-Furnished Design 80
9.06 Development of Land: Expanded Public
K. Beyond Products: Sellers of
Role 98
Services 81
9.07 Limitations on Land Use Controls:
L. Future Developments 81
Takings 99
7.10 Remedies 82
9.08 Local Land Use Control: The Process 102
A. Compensation 82
9.09 Original Enabling Acts and Euclidean Zones:
B. Collateral Source Rule 82
The MLDC 103
C. Punitive Damages 83
9.10 Flexibility: Old Tools and New Ones 104
D. Attorneys’ Fees: Cost of Litigation 84
A. Variances and Special Use
E. Interest 84
Permits 104
B. Nonconforming Uses 104
C. Rezoning 105
CHAPTER EIGHT D. Contract and Conditional Zoning 105
Introduction to the Construction E. Floating Zones 106
F. Bonus Zoning 106
Process: Ingredients for Disputes 85
G. Planned Unit Development 106
8.01 Relationship to Rest of Book 85 H. Open Space 106
8.02 The Eternal Triangle: Main Actors 85 9.11 Aesthetics and Control 107
A. The Owner 85 9.12 Historic and Landmark Preservation 107
B. The Contractor 88 9.13 The Environmental Movement and Owner
C. The Design Professional 89 Liability 108
D. The Industry 89 A. National Environmental Policy Act
8.03 The Supporting Cast on a Crowded (NEPA) 109
Stage 89 B. Comprehensive Environmental Response,
A. The Owner Chain: Spotlight on Compensation, and Liability Act
Lender 89 (CERCLA) 110
B. The Contractor Chain 90 Overview of Statute 110
C. The Design Professional Chain 90 Construction Industry Participants 111
D. Insurers 90 Insurance Coverage 111
8.04 The Construction Contract 90 Brownfi elds 112
8.05 The Delivery Systems 91 C. Resource Conservation and Recovery Act
8.06 The Applicable Law 91 (RCRA) 112
8.07 The Construction Site 92 D. State Law 113
8.08 Contract Administration 92 E. Environmentally Friendly Design and
8.09 International Transactions 92 Construction 113
8.10 Unresolved Disputes and Litigation 92 9.14 Judicial Review 114
CONTENTS ix
9.15 Housing and Land Use Controls 114 Statute Silent on Contractor’s Right to
A. Residential Zones 114 Compensation 139
B. Subdivision Controls 115 Statute Bars Contractor’s Right to
C. Exclusionary and Inclusionary Zoning 115 Compensation 140
D. Phased Growth 117 Sophisticated Parties 142
Payment Reimbursement 142
C. Summary 143
CHAPTER TEN 10.08 Should Contractors Be Licensed? 143
Professional Registration and Contractor A. Purpose of Licensing Laws 143
B. Harmful Effects 144
Licensing: Evidence of Competence
10.09 Contractor Licensing Laws 145
or Needless Entry Barrier? 119
10.10 The Unlicensed Contractor: Civil
Sanctions 146
10.01 Overview 119
A. Recovery for Work Performed 146
10.02 Public Regulation: A Controversial Policy 119
B. Exceptions 146
A. Justifi cation for Regulation 119
C. Substantial Compliance 147
B. Criticism of Licensing Laws 120
D. Observations 148
C. Importance of Attitude Toward the Regulatory
10.11 Indirect Effect: Forum for Consumer
Process 121
Complaints 148
D. Judicial Attitudes Toward Registration
10.12 The Trained but Unregistered Design Professional:
Laws 122
Moonlighting 149
10.03 Administration of Licensing Laws 122
A. Unlicensed Persons: A Differentiation 149
10.04 The Licensing Process 123
B. Ethical and Legal Questions 149
A. Admission to Practice 123
C. Recovery for Services Performed 149
B. Postadmission Discipline: Duncan v. Missouri
D. Liability Problems 150
Board for Architects, Professional Engineers
and Land Surveyors 123
10.05 Types of Licensing Laws 132
A. Licensing of Architects and Engineers: CHAPTER ELEVEN
Holding Out and Practice Statutes 132 Contracting for Design Services: Pitfalls
B. Contractor Licensing 132
and Advice 152
C. Variations on the Traditional Contracting
System 132 11.01 Authority Problems 152
10.06 Statutory Violations 132 A. Private Owners 152
A. Preliminary Issue: Constitutionality 132 Sole Proprietors 152
B. Holding Out 133 Partnerships 153
C. Practicing 133 Corporations 153
D. Architecture and Engineering Unincorporated Associations 153
Compared 134 Spouses or Unmarried Cohabitants 153
E. Statutory Exemptions 136 B. Public Owners 154
F. Possessor of License 136 11.02 Financial Capacity 155
G. Out-of-State Practice 137 A. Importance 155
H. Substantial Compliance 138 B. Private Clients 155
10.07 Sanctions for Licensing Law Violations 138 Retainers and Interim Fees 155
A. Criminal and Quasi-Criminal Sanctions 138 Client Resources 155
B. Recovery for Work Performed and Payment One-Person and Closely Held Corporations:
Refunds 138 Individual Liability of Offi cers 155