PaintSquare.com


The First Word in Protective & Marine Coatings

A Product of Technology Publishing / PaintSquare
JPCL | PaintSquare News | Durability + Design | Paint BidTracker

Free Download of

Paint and Coatings Industry News

Main News Page


Court Tightens Rules on Subcontractor Termination

Friday, September 4, 2009

Comment | More

In a major victory for opponents of bid shopping, the Maryland Court of Appeals has ruled that contractors must act in good faith and deal fairly with subcontractors when terminating them “for convenience.”

“A right to terminate in the absence of the other party’s breach does not equate necessarily with the right to terminate based on a whim,” the court ruled Aug. 25 in Questar Builders Inc. v. CB Flooring LLC. “We shall not read into the Subcontract such unfettered power.”

In the case, contractor Questar and subcontractor CB Flooring signed a subcontract for carpet and flooring work “through [the] duration of the project.” The subcontractor had been the low bidder on the $1.1 million contract, but design changes led the subcontractor to submit a change order.

After submitting the design changes to the next lowest bidder and receiving a price of $1,000 less, Questar replaced CB Flooring, citing a “termination for convenience” clause.

The concept of “termination for convenience” originally developed so that the federal government could cancel or change defense contracts based on wartime needs.

Such clauses are now common in construction contracts. But the Maryland court ruled that private parties do not have the federal government’s sweeping power to terminate contracts for convenience.

It also noted that Maryland law “generally implies an obligation to act in good faith and deal fairly with the other party or parties to a contract.”

“Questar’s contention that it was entitled to terminate the Subcontract for any reason whatsoever goes too far and is inconsistent with the terms of the Subcontract,” the court ruled.

The American Subcontractors Association, ASA of Baltimore and the D.C. Metropolitan Subcontractors Association jointly filed an amici curiae, or “friends of the court,” brief on Feb. 17, arguing that a breach “of the good faith and fair dealing covenant would not only poison business relationships and eliminate business certainty, but also do great damage to the ability of subcontractors to rely on their signed contracts as a reliable indicator of future work and expected revenues."

ASA tapped its Subcontractors Legal Defense Fund to pay the fees associated with this case. The SLDF supports ASA’s critical legal activities to protect the interests of all subcontractors. For more information, contact ASA at (703) 684-3450, ext. 1333, or email SLDF@asa-hq.com.

   

Tagged categories: Government contracts; Subcontractors

Comment Join the Conversation:

Sign in to our community to add your comments.

NLB Corporation
VacLance cleans up as you work

Add vacuum recovery to any NLB rotating water jet lance with a VacLance attachment and vacuum source. Model DM32283 works vertically, horizontally and in corners.


Elcometer, Inc.
New Elcometer 456 Coating Thickness Gauge

Best In Class Just Got Better. Technologically Intelligent And Robust. Marvelous Design And Durability. An Earth-Shattering Revolution In Coating Inspection.


Dampney Co., Inc.
Rubber In a can!

Rubberized Spray in a
Handy Aerosol Can

• Stays flexible
• Seals off moisture penetration
• Non sagging formulation
• Will not crack, chip or peel
• Apply to wet and dry surfaces
• Paintable


Modern Safety Techniques
Modern Safety Techniques

See our Low Temperature Catalyst for your CO removal needs. Help to provide your workers with safe, comfortable breathing air!


DRYCO
Environmental Controls
Equipment & Service

Temporary climate control equipment. Dehumidifiers,
Heaters, A/C, Power, More…
Toll Free: 866-379-2600


Wasser High-Tech Coatings Inc.
Wasser Coatings Protect

some of the most important bridges in the country; learn about our NEPCOAT-approved system and our entire range of MCU & Polyurea coatings. 1-800-627-2968 www.wassercoatings.com


MMLJ
Superfast Dustless Abrasive Blasting - Watch Video

Dustless Blasting creates no dust plume so others can work nearby unaffected. Maximize Productivity! Watch our numerous YouTube videos to learn more.

 
 
 
Technology Publishing

The Technology Publishing Network

The Journal of Protective Coatings & Linings (JPCL) PaintSquare
Durability + Design Paint BidTracker JPCL Europe

 
EXPLORE:      JPCL   |   PaintSquare News   |   Interact   |   Buying Guides   |   Webinars   |   Resources   |   Classifieds
REGISTER AND SUBSCRIBE:      Free PaintSquare Registration   |   Subscribe to JPCL   |   Subscribe to PaintSquare News
MORE:      About PaintSquare.com   |   Privacy policy   |   Terms & conditions   |   Site Map   |   Search   |   Contact Us
 

© Copyright 2000-2014, Technology Publishing / PaintSquare, All rights reserved
2100 Wharton Street, Suite 310, Pittsburgh PA 15203-1951; Tel 1-412-431-8300; Fax 1-412-431-5428; E-mail webmaster@paintsquare.com