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Although the economic effects of COVID-19 may be felt for many years to come, its effect on payment for ongoing construction may be more immediate.  What is the general contractor’s obligation to pay subcontractors when the project owner’s funds run out? Bluntly, it depends. One important consideration is whether the subcontract agreement contains a pay-if-paid clause.     1.    What is Pay-If-Paid? A pay-if-paid clause, more eloquently called a contingent payment clause, requires the owner to pay the general contractor before the general contractor has to pay its subcontractor. 

Very few people in the construction industry saw the novel coronavirus coming or reaching pandemic stage at the time they entered into their contracts.  Now that we are in full pandemic mode, with layers of federal, county and city guidelines or requirements for worksite safety, how does not seeing the pandemic impact your contractual obligations?  1.     Let’s Meet Texas, like most other states, requires proof of certain elements for a legally binding contract to exist.  One of the elements required for contract formation is a meeting of the minds of the contracting parties. What is

With stay-at-home orders in effect in various cities and counties throughout Texas, what are reasonable precautions to keep workers safe from a coronavirus infection or to reduce the spread of the virus?   Although Governor Abbott clarified in Executive Order GA 14 that construction is an Essential Service in Texas and, therefore, exempt from stay-at-home orders, he did not set out a uniform set of requirements or recommendations for jobsite safety to reduce transmission of the novel coronavirus. To determine whether requirements exist and, if so, what they are for a specific project, the st

What happens when unanticipated delays hit an ongoing project, but the contract does not contain a force majeure clause or an escalation clause? There are times when circumstances frustrate performance to the point where giving up may seem like the only option.  The novel coronavirus and COVID-19 pandemic present such circumstances. Frustration of performance, a case-law driven doctrine, may provide some relief.     1.    Finding Futility Frustration of performance is a form of rescission and provides legal excuse for not performing contractual obligations.  It is closely related to �

With the COVID-19 recession clouds gathering on the horizon, understanding your lien rights is more important than ever.  Unfortunately, Texas’ mechanic’s and materialman’s liens create a minefield of procedural and substantive requirements. Among the most commonly detonated mines are confusion over who is an “original contractor”, missing notice and filing deadlines, and failing to properly identify the property being liened.  Common Mistake #1: Confusing Original Contractor and General Contractor An original contractor is not always synonymous with a general contractor, at least

We could all use a few more Yogi Berra-isms to distract us from incessant drumbeat of miserable statistics reported in the news on a daily basis.  The COVID-19 pandemic raises employment issues that require careful attention even if the construction project is classified as an exempt or essential business.  Below are 4 employment considerations in the COVID-19 era. 1.     Review and Adhere to All Jobsite Health Rules and Guidance Federal, State and local governments have issued a crazy quiltwork of jobsite health rules and guidelines that impact construction sites in Texas. Aside from soc

So, what exactly happens when you kiss today goodbye, figuratively of course, in a construction project with a liquidated damages provision?  Although the past few years of critical labor shortages in subcontractor trades have tested the ability to complete projects within the contract time and contract price, the COVID-19 pandemic presents a challenge on a completely different order of magnitude. As construction projects shut down due to illness, manpower shortage, or restrictions on travel, there are a few helpful things to know about liquidated damages clauses. 1.     Liquidated Damages