Discussion 1 -
In the present economic environment, a highly-sophisticated Owner decides to build a luxury condominium tower in downtown San Francisco. Owner chooses the recognized industry leader in luxury condo construction as its General Contractor. In order to obtain the most favorable financing terms available, Owner must be able to begin selling condo units within 12 months of breaking ground (i.e., substantial completion of model units), and building must be move-in ready within 24 months of breaking ground. Failure to achieve either of these conditions will result in acceleration of Owner's constructions loans.
1. What key contract provisions would you insist on for your client if you represented: (a) Owner? (b) General Contractor?
2. Which forum, if any, would you select resolution of disputes, and why, if you represented: (a) Owner? (b) General Contractor?
Discussion 2 -
During design phase, Owner determines that a significant design feature that will separate its luxury condo tower from all others in San Francisco will be to obtain the City's first LEED Platinum certification for a condo tower. A LEED consultant is brought in to oversee architect's design and General Contractor's construction as to all LEED issues. Due to a mistake in the architect's plans, the wrong type of glass is used for all exterior windows on the building, and the LEED consultant does not catch the error. During construction, the HVAC system specified in the architect's plans is unavailable, and the General Contractor proposes an alternative system. The LEED consultant recommends that the owner accept the modification. Throughout the course of the project, Owner experiences cash flow constraints and fails to make progress payments on time. At one point, the steel framing subcontractor walks off the job and must be replaced by the General Contractor at twice the cost of the original steel framing sub's bid. At the end of the project, a LEED inspector gives the building Gold certification, noting that slightly higher scores on window and HVAC efficiency would have yielded Platinum certification. On these facts:
What contractual damages might be available to?
(a) Owner?
(b) General Contractor?
What non-contractual damages might be available to?
(a) Owner?
(b) General Contractor?
How might damages for failure to achieve LEED Platinum certification be?
(1) Calculated (2) Allocated among the potentially responsible parties.