Philadelphia Construction Law Blog

There is at least one universal truth in businesses of all kinds: no one likes to work for free. The risk of non-payment in the construction industry can be greater than in others because of the significant financial outlay that is required just to perform the work. Reimbursement for labor and material costs are required just to avoid losing money (not profit) on a job. And we all know what happens to companies that don’t at least break even most of the time.

Reviewing construction contracts is a regular part of my practice as a construction attorney. From limited reviews of specific provisions to preparation of an entire array of form contracts, I have seen many different contract clauses and methodologies to evaluate them. In the end, contracts are about the allocation of risk. While the Rules of Professional Conduct prohibit me from giving legal advice as part of this blog, there are some clauses that commonly draw more attention when time is limited in the contract formation stage. Here are the top 5:

In a prior post on November 19, 2012, I reported that the Superior Court of Pennsylvania held that the implied warranty of habitability extended to subsequent purchasers of residential properties. The Superior Court based its opinion on the foundation of public policy considerations flowing from the unequal bargaining power between developers/builders and residential home buyers.In its August 18, 2014, ruling, the Pennsylvania Supreme Court reversed that decision on the primary ground that public policy decisions are best left to the legislature.

A federal district court in New Jersey recently held that the economic loss rule does not apply to bar a contractor’s negligence claim against the design professional for a project if there is no contract between the contractor and the design professional. Based on the holding in SRC Construction Corp. of Monroe v. Atlantic City Housing Authority, any participant on a construction project in New Jersey may have a remedy in tort.