PaintSquare.com


The First Word in Protective & Marine Coatings

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

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.

Greener Blast Technologies
Reinventing the Blasting Industry

Greener Blast Technology, Inc. manufactures the most effective slurry blasting system available on the market to date.


US Minerals
US Minerals -
Black Magnum

With nationwide production and distribution capabilities, U.S. Minerals supplies a complete range of coal slag and other abrasives to meet all of your blasting needs.


KTA-Tator, Inc. - Corporate Office
KTA Analyzes
Coating Failures

• Field Diagnosis
• Lab Diagnosis
• Determination of Cause
• Recommendations
www.kta.com
800-245-6379


CESCO
AQUA MISER

• Ultra high pressure water blaster • 40,000 PSI stripping and cleaning power CESCO is the leader in environmentally sound cleaning and stripping technologies. See our YouTube videos
Contact us: 888-772-3726
Aquamiser.com
BlastandPaint.com


Polyval Coatings
POLYFLEX brand Polyurea

high chemical resistant membranes are used extensively to protect our environment in secondary containment applications.


JPCL Europe
Don’t miss an issue!

JPCL EUROPE offers essential news and knowledge for protective and marine coatings professionals in Europe, the Middle East and Africa. Subscribe now: www.jpcleurope.com


Advanced Recycling Systems
ADVANCED RECYCLING SYSTEMS (ARS)

Recycling Machines, Dust Collectors, Rapid Deployment units are time-tested and approved for the rugged industrial environment. Contact ARS today!
(330)536-8210

 
 
 
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