Incorporation by Reference Clauses in a Contract

The purpose of the type of contract provision is to bring another document into the contract without fully setting forth the incorporated document. It places “hidden” obligations in your contract. Since these clauses are enforced by the Florida courts, the old saw “ignorance is bliss” is an invitation to disaster.

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Changes Clause in a Contract

Changes in the work or claims for changes in the work are where we see the greatest volume of problems. As a practical matter, problems and changed circumstances which were not foreseen at the time the parties signed the contract will arise during every construction project. A changes clause provides the vehicle by which, without breaching the original contract, changes can be ordered to add work, correct errors in the specifications, or improve the quality of materials or methods of construction.

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Acceleration

Acceleration of a contractor’s performance may arise in two situations. The first situation occurs when a specific order is issued under the express contract to complete the project prior to the originally scheduled completion date.

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Fraudulent Liens

Florida Statute Section 713.31 provides that where a lien claimant has willfully exaggerated the amount of the lien, or has compiled the lien in a grossly negligent manner, such action is a complete defense to enforcement of the lien. In addition, and of critical importance to lienors, an injured party such as the owner may assert an affirmative claim of its own against the lienor for damages, costs and attorneys’ fees resulting from the fraudulent lien.

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“Pay When Paid” Provisions and Bonds

One of the more problematical contract clauses under Florida law is the payment clause in a subcontract where the general contractor seeks to avoid payment to the subcontractor or supplier until payments are received from the owner. These so-called “pay when paid” provisions in subcontracts are usually classified as either condition precedent or time of payment provisions.

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Checklist For Construction Liens and Surety Bonds

1. Contractors and Suppliers Contracting Directly with the Owner

Ensure that owner has recorded and posted Notice of Commencement prior to starting work or delivering materials;
Record Claim of Lien in the county where the property is located within 90 days of final furnishing of labor, services or materials;
Serve copy of Claim of lien on owner either before or within 15 days of recording;
Contractors only – serve Final Contractor’s Affidavit at least five days before filing suit;
File suit within one year of recording the Claim of Lien.

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Supreme Court Ruling Impacts Contractors

The Supreme Court recently issued a ruling which will impact all contractors doing business with public bodies. In County of Brevard v. Miorelli Engineering, Inc., the Court dealt with a situation where the County contracted with Miorelli to build a spring training facility for the Florida Marlins. After work had commenced on the facility, the County terminated the contract and withheld amounts due to the contractor. Miorelli sued the County, asserting a variety of claims, including a claim for extra work.

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Arbitration and Litigation

Arbitration is often referred to as an alternative to litigation. However, they share the same fundamental premise. A third party is responsible for deciding any dispute. In arbitration, the parties present their dispute to an impartial arbitrator who will make a binding decision on the parties. Arbitration takes place as a result of an agreement in the contract between the parties requiring disputes to be submitted to arbitration. Parties may also agree to arbitration after a dispute arises even in the absence of a contract provision.

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Negotiation and Mediation

Negotiation and Mediation are the least costly ways to reach an agreement. Here’s how to make them work.

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Procedure for Perfecting Lien Rights

A construction lien is a claimable charge against real property to secure a debt incurred for improvement of the property. Liens can be very valuable legal tools so long as certain procedural requirements have been satisfied. The purpose of the lien law in Florida is to give security to the contractor, subcontractor or material supplier for a debt incurred for furnishing or installing a product where the product itself cannot be retained to secure payment of the debt.

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Florida Bar
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