Construction Law Insider
Construction contract strategies for Owners and Developers.
Notice Requirements For Contractors Should Include Waivers For Non-Compliance
03.27.2024
Construction projects in New York City are often fast-paced and large in scale. As a result, the attention of both contractors and owners is often focused on the progress of construction and not the details of the underlying agreement between the parties, and it is not uncommon for certain contractual terms to be overlooked.
Construction contracts should always include some form of notice of claim provision, requiring the contractor to provide the owner with written notice of a given event within a specific number of days in order to trigger rights under the agreement, such as a delay claim or change order request. A failure to satisfy the time requirement of the notice can, in certain circumstances, lead to the forfeiture of the contractor’s rights.
In general, New York courts enforce contractual notice provisions strictly and in accordance with their express terms—provided the notice itself includes the consequence of non-compliance. However, there are circumstances in which courts have shown a willingness to accept something less than strict compliance with the literal terms of a notice provision. A court’s analysis depends heavily on the nature and wording of the notice provision in question and the surrounding circumstances. “Strict” notice provisions almost always render the time element of the notice a condition precedent to the triggering of a contractual right or duty; that is, unless a condition stated in the notice (e.g., the notice must be given within a certain amount of days after the event giving rise to the notice occurs) is met, any rights under the notice are waived. Courts also note that strict notice provisions should contain a statement setting forth the consequences of a failure to strictly comply.
By contrast, “liberal” notice provisions are less exacting in their language and fail to render the providing of notice a condition precedent to some other contractual right or duty. Liberal notice provisions may also fail to state the consequences of a failure to comply with their terms. When applying liberal notice provisions, courts are far more willing to consider ancillary circumstances, such as whether or not a party had actual notice of the event in question (despite a lack of formal notice), or whether the party to be noticed was actually prejudiced by its failure to receive formal notice. In short, when the language of the notice provision is less exacting, courts give parties greater latitude in enforcing contractual rights.
In the assessment of whether a party has complied with a notice requirement, the language of the provision itself is paramount. Where the language of the notice provision is explicitly strict, meaning that it makes notice a condition precedent and lays out the consequences of a failure to provide notice, courts are almost certain to demand literal compliance with the provision. By contrast, where notice is not a condition precedent and the provision makes no reference to the consequences of failing to provide notice, courts are far more flexible in their interpretation of the provision. Under this more liberal standard, the question of whether the notice requirements have been satisfied is a fact-specific one and outcomes may vary on a case-by-case basis.
In order to avoid this result, construction contracts should expressly provide the time in which notices must be given by the contractor and the consequences (e.g., waiver of the claim) of the failure to comply with the notice requirement. With this language, the contract’s notice requirements will be strictly enforced.
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03.27.2024 | PRACTICE AREAS: Construction & Design Law