Courts may not rule in your favor if you are not properly following the provisions in your construction contracts. See how making small, inadvertent errors can be detrimental to your case.
If you are in construction or hire contractors, having a dispute is not a matter of “if” but a matter of “when.” Not only having a properly structured contract but also properly following its provisions regarding notices can make or break your case and your project.
If a construction contract states written notices are required, you must give more than oral notice to comply with the agreement. The Texas Supreme Court recently held that, “when a contract mandates written notice, a writing is a necessary part of complying with that condition, substantially or otherwise.”
The case of James Construction v. Westlake Chemical dealt with two competing ways to interpret a construction contract: the doctrine of Strict Compliance versus Substantial Compliance.
Strict Compliance involves enforcing contracts as written and requires exactitude in performing contractual duties. On the other hand, Substantial Compliance excuses the “exactitude in the performance of contractual duties where any deviations or deficiencies do not seriously impair the purpose underlying the contractual provision.”
In this case, Westlake Chemical (owner) hired James Construction (contractor) to perform civil and mechanical construction work at a chemical facility in Louisiana. The construction contract required Westlake Chemical to submit a series of three written notices to be able to terminate James Construction for anything, including “serious safety violations”.
Unfortunately, a tragic accident occurred, and the parties spoke extensively about James Construction’s safety violations concerning that accident. But Westlake never gave written notice to James Construction.
As a result, Westlake Chemical eventually filed suit against James Construction, claiming termination for default. James Construction defended by asserting that it had not received three written notices as outlined in the contract.
Westlake Chemical responded by stating that it had substantially complied with the notice requirement by telling James Construction about the safety violations. However, James Construction did not deny knowing about the safety violations.
In siding with James Construction, the Court stated that “absent compelling reasons, courts must respect and enforce the terms of a contract the parties have freely and voluntarily entered.”
The lessons from James Construction for parties to a construction contract are:
- Read and follow the contractual requirements and notice provisions
- Do not rely upon OAC meeting minutes and daily reports to qualify as notice
- While email and text may qualify as written notice, following the required notice forms is a better practice.
If you have a question or need counsel regarding your construction contracts, Joe Tolbert at Brackett & Ellis, P.C. is ready to help you protect your rights. Contact Joe today at 817-338-1700.