This year's legislative sessions were among the most unproductive in a number of years. Certainly problems relating to reapportionment and tax reform contributed to the problem, to say nothing of the strained relationship between the House and the Senate. Special sessions were held for the budget, the education reorganization, and the reorganization of the duties of cabinet offices that were abolished.
Despite this some issues relating to the construction industry were addressed. Since the process for transmitting bills passed by the legislature to the Governor and the time for the Governor to either sign or veto the bills is quite extended, there is a possibility that some of these bills may still be vetoed.
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This bill allows a property owner to use a licensed engineer, architect or building code official to review plans and to make building code inspections. This bill also directed the Florida Building Code Commission to develop a rehabilitation code and directed adoption of the federal standard for economic hardship in meeting requirements for the Americans With Disability Act. This is a more relaxed standard from what had been required in Florida. The Commission was also directed to establish an informal process for rendering non-binding interpretations of the Building Code. Criteria for adoption of local amendments to the Code were added. This will make it more difficult for local entities to amend the Code. This bill will become effective upon becoming law (subject to the Governor's veto).
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There was considerable discussion
of workers compensation issues, but not much was
accomplished. In the ongoing struggle over exemptions
from requirements for workers compensation, a
further step was made towards elimination. For
commercial construction jobs in excess of $250,000.00,
exemptions from workers compensation coverage
will no longer be permitted. This bill also imposed
additional record keeping requirements on those
claiming an exemption. In addition, if the records
are not produced within three business days, a
stop work order may be issued.
Upon determination that a person
has failed to secure workers compensation coverage
as required by law, a stop work order within 72
hours of making the determination is now required.
A penalty in the amount of the premium evaded
or up to twice the amount of the premium evaded
or $1,000.00, whichever is greater, is now required
for failure to secure coverage. The bill also
made changes designed to expedite the dispute
resolution process in the hopes that this will
reduce costs for the overall administration of
the workers compensation system. It also authorized
rewards of up to $25,000.00 to persons providing
information leading to the arrest and conviction
of anyone committing insurance fraud. In addition,
employers are now required to post a notice informing
employees of the anti-fraud reward program.
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This bill requires a drug free workplace
program for contractors who do work on public
projects. Drug testing of employees and job applicants
is required to qualify as a drug free workplace.
This bill will take effect October 1, 2002 (subject
to veto).
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This is a proposed amendment to
the State Constitution to create a commission
of six legislators each from the House and the
Senate to review sales tax exemptions. The Commission
will be able to eliminate any exemption by a vote
of seven members. The Legislature can restore
the exemptions within two legislative sessions.
Construction services will be one of the items
that currently has an exemption which will be
subject to review.
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This bill impacts purchases from
the State, including construction services. Notice
of procurement decisions will be posted on a website
maintained by the Department of Management Services.
The 72 hour time limit for filing a Notice of
Protest commences upon the posting. The amount
of the bond a protester must file is now one (1%)
percent. Previously it was the lesser of $5,000
or one (1%) percent of the contract price submitted
by the protester. If not vetoed by the Governor,
these provisions will take effect July 1, 2002.
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The one-call access notification
center may receive notices by e-mail and fax in
addition to the toll free telephone number. It
requires excavators to pre-mark the excavation
site under certain circumstances and requires
hand digging and similar procedures in a tolerance
zone. The effective date is October 1, 2002. If
you would like copies of these bills or are in
need of further explanation, please do not hesitate
to contact us.
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Over the years there has been disagreement
over the validity of an arbitration clause which
permits one side but not the other to decide if
a dispute will be arbitrated or litigated. The
argument for its invalidity has been that there
is a lack of a mutual obligation to arbitrate.
A recent Florida case appears to have resolved
that question. In Avid Engineering, Inc. v. Orlando
Marketplace, Ltd., the engineering company objected
to arbitration on the grounds that the contract
gave the other party discretion to decide whether
to arbitrate without giving the engineer the same
right.
The Court reasoned that the engineer
agreed to perform services in exchange for payment.
This was deemed sufficient consideration to bind
both parties to all obligations under the contract,
including the optional arbitration clause and
that the arbitration provision was not void for
lack of mutuality of obligation. The Court pointed
out that the optional arbitration clause had not
required the engineer to give up any claims or
damages that it could have received in Court.
The contract was merely substituting a forum for
deciding those claims or damages.
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Acceleration of a contractor's performance
may arise in two situations. The first occurs
when a specific order is issued under the express
contract to complete the project prior to the
originally scheduled completion date. The second
theory of acceleration is based on the effects
of excusable delay on the contractor's time of
performance. When a contractor encounters excusable
delay in completing a contract, the contractor
is entitled to a timely extension of the contract
time in which to complete the work. When the owner
or its representative refuses the extension or
simply does not respond, a constructive acceleration
of the contract exists since the contractor effectively
has less time than originally promised in which
to perform the required work.
Some contracts specifically allow
the owner to accelerate the time of performance
of the work. Generally, when the contractor is
directed to complete the work in advance of the
scheduled completion date, and the order is signed
by the owner or his representative, it is clearly
an ordered change and the contractor's claim for
additional compensation should be presented in
accordance with the standard change order procedures.
A more complex situation arises when the contractor
encounters an excusable delay and requests an
extension of the contract time but the owner refuses
to recognize the delay and requires that the contract
be completed by the originally specified date.
Or, in another situation, the owner
may recognize a delay but of a shorter duration
than that to which the contractor is entitled.
In these circumstances the contractor is placed
in the position of either risking contract default
if it finishes at a time later than that required
by the owner or expending extra funds in order
to overcome the excusable delay and finish the
contract as demanded. Although the owner may not
have issued any express order under the changes
clause which would qualify as ordered acceleration,
many courts have developed the doctrine of constructive
acceleration to encompass those situations where
the owner acts in such a way that it will be deemed
to have ordered acceleration.
Courts generally look to the following
factors when analyzing a claim for constructive
acceleration:
a. The contractor has encountered
excusable delay for which it is entitled to a
time extension;
b. The contractor specifically requested
a time extension from the owner according to the
contract provisions;
c. The owner failed or refused to
grant the extension;
d. The owner either: (i) ordered
completion within the original performance period,
or (ii) acted in such a way that it was clear
that the owner still required the contractor to
complete within the original performance period;
e. The contractor gave notice to
the owner that it considered the actions of the
owner a constructive change order for acceleration;
and
f. The contractor actually incurred
excess costs as a result.
When faced with a possible acceleration
situation, the contractor should make all reasonable
attempts to complete the project on schedule and
carefully document all impact costs resulting
from the acceleration. Failure to complete the
project on time exposes the contractor to potential
claims by the owner for liquidated damages, lost
rents, lost profits, and extra financing costs,
and may weaken the contractor's claim for acceleration
damages.
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The purpose of this type of contract
provision is to bring another document into the
contract without fully setting forth the incorporated
document. It may place "hidden" obligations in
your contract. These clauses are enforced by the
Florida courts. Most often we see the Plans and
Specifications incorporated into the contract.
The effect is to make them a part of the contract
documents. The obligation to fulfill the provisions
of the Plans and Specifications is just as binding
as any contract clause actually written in the
contract. This can extend down several levels.
In our example the Plans and Specs are now part
of the contract. The Specifications may then incorporate
other documents such as installation requirements.
The effect of this is to incorporate those requirements
into the contract. The fact that these requirements
were not included in your estimate will not prevent
enforcement of these obligations.
Another typical incorporation is
found in subcontract agreements where the contract
between the owner and contractor is incorporated
by reference. Again all of the terms of that general
contract are now terms of the subcontract including
the documents incorporated into the general contract.
The subcontractor then assumes an obligation to
perform under those terms. The fact that you have
not seen the incorporated documents will not relieve
you of their requirements.
Since these types of clauses are
enforceable, a failure to comply is a breach of
contract subjecting you to damages for any failure
to comply. The first step, of course, is to obtain
each of these documents, before you sign a contract.
All of the incorporated documents must be reviewed
in detail to determine the extent of your obligations.
Any provisions that are not acceptable should
be specifically deleted from your contract.
Contracts are like seat belts. Putting
them on takes time and energy and on most trips
they serve no useful purpose. However when an
accident happens they become your most important
accessory. Many jobs get done without ever looking
at the contract. However, when problems arise
on the job the first thing that comes out of the
file cabinet is the contract. You may be in for
some unpleasant surprises if you haven't looked
at the incorporated documents.
If you need additional information, please contact
our office and we will be happy to assist
you.
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