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Daubert Test

Standard used by a trial judge to make a preliminary assessment of whether an expert’s scientific testimony is based on reasoning or methodology that is scientifically valid and can properly be applied to the facts at issue. Under this standard, the factors that may be considered in determining whether the methodology is valid are: (1) whether the theory or technique in question can be and has been tested; (2) whether it has been subjected to peer review and publication; (3) its known or potential error rate; (4) the existence and maintenance of standards controlling its operation; and (5) whether it has attracted widespread acceptance within a relevant scientific community. See Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). The Daubert standard is the test currently used in the federal courts and some state courts. In the federal courts, it replaced the Frye standard.

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No Damages for Delay

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Active Interference

Active interference occurs when an owner’s willful, affirmative act alters the contractor’s performance. For instance, a directive to erect steel out of sequence in an effort to enhance the appearance of progress on the project was active interference. Left undefined is the degree and seriousness of the interference.

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Spearin Doctrine

Construction defect claims are one of the fastest growing areas of construction litigation and a potential source of crippling liability for contractors. Contractors are aware that the contract specifications instruct the contractor what to build. However, the specifications may also hold the key to a successful defense to defective workmanship claims thanks to what is known as the Spearin doctrine. Successfully invoking a Spearin doctrine defense hinges on whether the specifications are “performance” versus “design” specifications. Because the distinction between the two is often nuanced, understanding the difference between a performance and a design specification is critical to a Spearin doctrine defense.

Today, the modern approach to Spearin assigns responsibility for a defective construction according to whether the specification prescribing the construction is a performance or a design specification. See PCL Construction Services, Inc. v. United States, 47 Fed. Cl. 745 (2000). Because a contractor can invoke the Spearin doctrine only when it builds a system according to a design specification, it is important to understand the difference between the two. Moreover, it is important for contractors to be able to spot performance specifications because of the increased risk the contractor assumes when building according to a performance standard.

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Implied Powers

Legal principle that, in general, the rights and duties of a legislative body or organization are determined from its functions and purposes as specified in its constitution or charter and developed in practice.

A contractor that is claiming that a particular specification is design rather than performance must establish that the specification does not allow any kind of meaningful discretion in how the work is performed and, further, that the defective specification is the cause of the injury. Id. In other words, the contractor has to prove that he or she followed the design precisely and thoroughly and that any deviation was a result of the design itself, not the contractor’s work product. The key here is determining/proving that the specification is a design, rather than a performance specification.

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Inherent Powers

Inherent powers doctrine refers to the principle by which the courts deal with diverse matters over which they are thought to have intrinsic authority like procedural rule-making and general judicial housekeeping. To justify the invocation or exercise of inherent powers, a court must show that the powers are reasonably necessary to achieve the specific purpose for which the exercise is sought. Inherent powers enable the judiciary to accomplish its constitutionally mandated functions. This power is based on the interpretations of Art. I, § 8, cl. 18 of the Constitution.

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Rule of Reason

Rule of reason is a judicial doctrine of antitrust law which says a trade practice violates the Sherman Act only if the practice is an unreasonable restraint of trade, based on economic factors. In order to determine whether there is unreasonable restraint the court must ordinarily consider the facts peculiar to the business to which the restraint is applied; its condition before and after the restraint was imposed; the nature of the restraint and its effect, actual or probable. The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be attained, are all relevant facts.

By and large, the construction of the rule of reason inquiry has remained unaltered since the Supreme Court first articulated it in Chicago Board of Trade v. United States, 246 U.S. 231, 238, 38 S. Ct. 242, 244, 62 L. Ed. 683 (1918).

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Substantial Certainty

The substantial certainty doctrine is a legal theory that assumes the required criminal intent even if the actor did not intend the result, but knew with substantial certainty what the outcome of his or her actions would be.

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Clean Hands

A rule of law that a person coming to court with a lawsuit or petition for a court order must be free from unfair conduct (have "clean hands" or not have done anything wrong) in regard to the subject matter of his/her claim. His/her activities not involved in the legal action can be abominable because they are considered irrelevant. As an affirmative defense (positive response) a defendant might claim the plaintiff (party suing him/her) has a "lack of clean hands" or "violates the clean hands doctrine" because the plaintiff has misled the defendant or has done something wrong regarding the matter under consideration. Example: A former partner sues on a claim that he was owed money on a consulting contract with the partnership when he left, but the defense states that the plaintiff (party suing) has tried to get customers from the partnership by spreading untrue stories about the remaining partner's business practices.
See also: affirmative defense

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Dirty Hands

Dirty hands doctrine refers to an equitable defense available to a defendant against the plaintiff. In this defense, the defendant can claim that the plaintiff should not be granted relief because the plaintiff has acted in bad faith regarding the subject matter of the complaint. A person is abstained from receiving equitable relief when s/he acts in bad faith or in an unethical manner. The rule embodied in this doctrine is that the participant in a wrongful act may not recover damages resulting from it. Generally it is the defendant who claims the defense; hence, the burden of proof is on the defendant to show that the plaintiff is not acting in good faith. This doctrine is also known as the unclear hands doctrine.

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Abandonment

Abandonment is a well-known concept on construction projects in the US. It generally arises in different situations. One example is when the project’s design is so deficient that the contractor performs a massive amount of change orders and extra work. This may qualify as contract abandonment, resulting in the contractor or subcontractor recovering damages against the owner or prime contractor on a quantum meruit theory (with the exception set forth below).

Another example is when a contractor wrongfully ceases working and leaves the project. This is project abandonment.

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Cardinal Change

A “Cardinal Change” is one where the purpose of the original agreement has been frustrated or made impossible by the extent or scope of the requested change. A cardinal change amounts to the contractor’s agreement being breached by the owner.

“The test to be applied is whether the supplemental work [or change] ordered so varied from the original plan, was of such importance to the success of the project, or so altered the essential identity or main purpose of the contract/project that it constitutes essentially a new undertaking.”[2] It is the magnitude of impact on the original purpose of the construction contract of the proposed addition or omission[3], not the size or value of the change, which is the court’s consideration in determining a cardinal change. Each project is different and must be considered on its own merits. Cardinal change varies from state to state.

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Termination for
Convenience

Although the specifics of the clause may vary, the standard Termination for Convenience clause gives the owner - or the general contractor in the case of a subcontract agreement the right to terminate, or cancel, the agreement without cause and simply for "its convenience."


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Patent Ambiguity

 

Preponderance of Evidence

 

Proximate Cause

 

Doctrine of Impossibility

The doctrine of impossibility of performance applies when uncontrollable circumstances have made the contract impossible or impracticable to carry out. Impracticable is defined as something that can only be done at an excessive and unreasonable cost. This doctrine relies heavily on three very important key factors:

  1. An unexpected event must have occurred to keep work from being completed for 90 consecutive days.
  2. The contractor must have had no prior knowledge that this event was going to occur and began the contract anyway.
  3. The event must have made completing the work impracticable.

All three of these factors must be met in order for the plea to be successful in court.


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Doctrine of Impractability

One is excused under impracticability doctrine provided that:

  1. an event unexpected at the time of contracting makes one’s performance commercially impracticable, and
  2. one ought not to bear the loss from the occurrence of the event.

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Unjust Enrichment

The theory of unjust enrichment is a legal fiction defined as an obligation imposed by law to do justice even though it is clear that no promise was ever made or intended. Unlike quantum meruit, unjust enrichment does not require an assent between the parties. Quantum meruit is premised on the expectation of the parties, while unjust enrichment is supported by the interest of society in the prevention of injustice.

One must prove the following elements to recover under the theory of unjust enrichment:

  1. lack of an adequate remedy at law;
  2. a benefit conferred upon the defendant by the plaintiff coupled with the defendant’s appreciation of the benefit; and
  3. acceptance and retention of the benefit under circumstances that make it inequitable for him or her to do so without paying the value of it.

Each of these elements present peculiar issues and analytical challenges.


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Substantial Factor Test or Theory

 

Silent (Implied)
Contract Terms

 

Comparative Negligence

Has the percentage of “fault” something that a someone can rely on to reduce the amount of money they may owe on construction project gone bad. The answer no. If you are even 1% liable for the damages on a project, it is possible that you can be hit with 100% of the damages.

This is not true in all jurisdictions, where proportional fault (called comparative negligence) is often allowed. In those states, if you are found 20% liable, you only have to pay 20% of the damages. This is jurisdiction-dependant.


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Duty of Care

Generally, the contractual obligation is a duty to perform services with reasonable skill and care, that is, to the standard of a reasonably competent professional. However, if an appointment is made on the basis of specialist capabilities, then the duty will be to perform services with the standard of care that would be expected from a reasonably competent specialist, rather than the standard of a general practitioner operating in that field.

Ordinarily a professional’s contractual obligation to his client only extends to agreeing to conduct his services with reasonable skill and care (but note Gloucestershire Health Authority v Torpy (1997) 55 Con LR 124 where it was held that the standard of care to be expected from specialist engineers may be more onerous than general practice engineers).


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Economic Loss

The “economic loss rule” provides that a party who suffers only economic harm may recover damages for that harm based only upon a contractual claim and not on a tort theory, such as negligence or strict liability. The law of torts provides a basis for recovering for personal injury or property damage. By contrast, economic loss includes damages for disappointed expectations, whether relating to a product or structure that does not perform as promised or to other types of financial harm, such as lost profits, delay damages, loss of benefit of the bargain, and the reduced value of property. The economic loss doctrine has been recognized or applied in some fashion in courts throughout the United States. However, the “rule” is not uniform, and its application does not bring about consistent results in courts in different states. In fact, the economic loss rule is characterized and applied differently in different jurisdictions, and different exceptions to the rule are applied. The economic loss rule, as applied under the law of a particular state, may bring about an outcome entirely different from its application in another state.

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Quantum Meruit

Quantum meruit literally means 'what the job is worth'. Under a quantum meruit claim, a contractor is entitled to a fair and reasonable sum for work performed and materials supplied.

A quantum meruit claim arises if there is no specified sum to be paid for work done under an agreement between the parties. However, it can arise even where there is a contract if:

  1. there is an express agreement to pay a reasonable sum;
  2. work is done outside the contract, at the request of the owner; or
  3. the contract is later found to be void or unenforceable.

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Reasonable Doubt

Reasonable doubt is the highest standard of proof used in court. In civil litigation the standard of proof is either proof by a preponderance of the evidence or proof by clear and convincing evidence. These are lower burdens of proof. A preponderance of the evidence simply means that one side has more evidence in its favor than the other, even by the smallest degree. Clear and convincing evidence is evidence that establishes a high probability that the fact sought to be proved is true. The main reason that the high proof standard of reasonable doubt is used in criminal trials is that criminal trials can result in the deprivation of a defendant's liberty or in the defendant's death, outcomes far more severe than occur in civil trials where money damages are the common remedy.


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Betterment or Added Benefit

Unjust enrichment in construction projects is a complex issue when considering the juxtaposition of both the financial measurement of repair or replacement corrections to building components and the degree of improvement after the fix. Generally, a building component modification which enhances or improves a building system or “part” beyond the fix, becomes an added benefit for an owner and constitutes “betterment”.


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Early Finish Requirements

A construction contractor can save money in time-related costs and field overhead if a project can be finished ahead of the contract completion date. Correspondingly, a contractor may be damaged and may have a valid claim when the owner causes delay and prevents the contractor from accomplishing early completion. Although contracts will normally not include a clause relating to early completion, the contractor typically enjoys the right to finish early.

LAW ON EARLY COMPLETION
Although the laws on early completion claims varies from state-to-state, the weight of the law appears to be that early completion claims should pass the following tests:

  1. The contractor will have communicated to the owner an intention to complete early and must provide the proper documentation.
  2. The schedule indicating an early finish should be feasible and reasonable and prepared in accordance with industry standards.
  3. Owner actions or inactions that interfere with the contractor from completing early in accordance with the approved schedule must be demonstrated.
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Business Entry Rule
(Exception to Hearsay Rule)

Business-Entry Rule is an exception to the hearsay rule which allows business records such as reports or memoranda to be admitted into evidence if they were prepared in the ordinary course of business. The basis for the rule is 'the probability of trustworthiness of records because they were routine reflections of the day to day operations of a business'. However this rule does not apply if there is a good reason to doubt a record's reliability. Hospital records are generally admissible as business records to show the case history and the injuries suffered, even though the information is technically hearsay.

The test of admissibility of memoranda covered by the business entry rule is the 'regularity' of the business practice in making such a record. [Smith v. Bear, 237 F.2d 79, 89 (2d Cir. N.Y. 1956)] Admission of daily reports depends on this rule.


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Disclaimer

These definitions are presented herein to provide a layman's understanding of these terms. They are not legal opinions or definitions. Consult your legal council prior to applying their content.

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James G. Zack, Jr.
Executive Director
Navigant Construction Forum,
Navigant Consulting, Inc.
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