PaintSquare.com
      | Connect Follow us on Twitter Like us on Facebook
About | Subscribe | Advertise
  

 

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.

Armakleen Company, The
ARMEX when nondestructive cleaning is critical

The gentle physical propriety of baking soda but yet aggressive cleaning ability is what makes ARMEX the only choice for nondestructive abrasive blasting.


WINOA Group
W Abrasives : Maintenance Pack

The blasting company able to reduce your maintenance costs up to 30% by fine-tuning consumption, and increasing productivity. Visit us during the GIFA (Hall15 - D14).


HoldTight Solutions Inc.
NO FLASH RUST -
NO CONTAMINANTS

Our HoldTight®102 salt remover & flash rush inhibitor prevents flash rust by removing surface contaminants.
Contact us for your nearest distributor. (800) 319.8802 sales@holdtight.com


DRYCO
Climate Control...delivered.

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


CHLOR*RID International Inc.
Free Webinar

Learn about soluble salts, along with a discussion on allowable levels.
More information at
www.chlor-rid.com,

800-422-3217


Absolute Equipment/Grand Rental Station
Portable Power from Absolute Equipment

•Compressors
•Lighting Systems
•Generators
•Light Compaction
Sales • Rental • Service
Call 1-866-931-6655
Over a century of
providing excellence.


Montipower, Inc.
The MBX Bristle Blaster

Get a 2.7 to 3.3 mil profile and a Near White Metal Clean. For info visit www.mbxit.com or call 877 629-8777


BASF
New resins from BASF will have metals loving water:

Excellent corrosion resistance, low VOC, high gloss, thin films basf.us/industrialcoatings
polyorders@basf.com
800-231-7868


NLB Corporation
Water Jets in Action

Video demo shows how
easily Vortex™ removes
coatings and more. Lawn-
mower-style water jet unit strips floors, ship decks, etc. quickly and keeps debris contained.

 
 
 
Technology Publishing

The Technology Publishing Network

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

 
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 2000-2015, 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