How do owners prevent a contractor from successfully pursuing a claim? Put a notice requirement in the way.

Like eating right and exercising, keeping up with contractual and statutory notice requirements takes time, thought and effort. This article provides a broad overview of notice requirements, the enforceability of notice requirements and the most common exceptions.

Consider that notice requirements are imposed on contractors by two authorities. The first authority is the body of statutory and administrative law that applies to the work. For example, the law in most states requires a contractor to comply with notice requirements to preserve lien rights and bond-claim rights. Contracts may not mention these notice requirements or, worse, certain contracts may include terms seeking to modify statutory notice requirements.

The first question a contractor should answer is what the legal notice requirements are applicable in the jurisdiction where the project is located. The second task is to review the specific contact to determine whether the contract has language that could modify these requirements and then to consult with an experienced counsel to understand what notice requirements apply.

The second—and likely more prolific source of notice requirements for each project—is the contract documents. Contractual notice requirements are spread throughout commonly used industry forms as well as the forms drafted by most private builders and contractors. Each of the following clauses in a contract will likely include a notice requirement:

• site conditions;
• schedule and delay;
• changes; claims;
• payment;
• remedies; and
• indemnity.

These contractual notice requirements typically consist of three components. First, the obligation to provide a notice under specific circumstances. Second, the form and contents of the required notice. And the agreement to negative consequences if proper notice is not given.

Notice provisions are enforced by most courts. If a contractor signs a notice provision, then the contractor should expect to manage the notice process to avoid the stated consequences of failing to strictly comply. Federal and state courts will, as a general rule, enforce provisions requiring written notice within a specified period of time. This is often referred to as a general rule of strict enforcement.

A good example of a court opinion in which a state court applied the general rule of strict enforcement is Broward County v. Brooks Builders, Inc., 908 So. 2d 536, 539 (Fla. 4th DCA 2005). In this case, Brooks Builders sought to recover added costs despite its failure to provide contractually required notice. The Court applied the rule of strict construction to reject the claim. Brooks Builder’s claim was lawfully rejected because of lack of notice.

A good example of a federal court opinions where the federal court applied the general rule is Marriott Corp. v. Dasta Const. Co., 26 F.3d 1057 (11th Cir. 1994). Dasta Construction pursued Marriott for added compensation even though Dasta Construction did not comply with the contractual notice requirements. Dasta’s primary argument was that the owner had actual notice of its complaints. Unfortunately for Dasta Construction, the court applied the general rule and precluded the claim due to lack of notice.

There are exceptions to the general rule. Sstate and federal courts have refused to enforce notice provisions based on specific facts and circumstances when the contracting parties engaged in a course of dealing that disregarded the notice requirements.

In one Florida state court case, Pan American Engineering Co., Inc. v. Poncho's Const. Co., 387 So. 2d 1052 (Fla. 5th DCA 1980), the court determined that the course of dealing between the parties could alter or waive of the written change order provision.

In a Kansas state court case, Tripoli Management, LLC v. Waste Connections of Kansas, Inc., 2011 WL 2897334 (D. Kan. 2011), the court determined that the parties could waive the written change order requirement through their course of dealing.

Some examples in federal court are: U.S. for Use and Benefit of Evergreen Pipeline Const. Co., Inc., 95 F.3d 153 (2d Cir.1996) (affirming finding of waiver of written notice provision for claim for extra work); In re Electric Machinery Enterprises, Inc., 416 B.R. 801 (Bankr. M.D. Fla. 2009) (finding that the parties waived the claims procedures by utilizing a more informal process)

The Florida Supreme Court in Brevard v. Miorelli Engineering, Inc., 703 So.2d 1049 (Fla. 1997) refused to recognize this exception for Florida public projects were the extra work is performed without the contractually required written notice. However, the Federal Court of Claims, unlike the Florida Supreme Court, has recognized waiver by course of dealing as an exception to providing the required written notice for federal projects for claims for extra work. See Miller Elevator Co. v. US, 30 Fed.Cl. 662 (1994) (finding that the federal government waived the requirements of the contract requiring written authorization for extra work from its course of dealing).

Contractors should invest the time needed to identify legal and contractual notice provisions applicable to each project and ensure compliance. The time invested could be the difference between a financially successful project and financial loss.