CASE STUDY ASSIGNMENT
CASE 1: Gjehlefald v: Drainage District Number 42 et al. (212 N. W. 691)
Summary: This case concerned a unit price contract to make improvements in a drainage system. Gjehlefald was deemed the low bidder with a total price of $143,000. This total was based on the application of the unit prices quoted by Gjehlefeald to the estimated quantities prepared by the owner. For overdepth excavation work, Gjehlefald's bid stated that this work would be priced at "50% above the attached schedule." When the contract was sent to Gjehlefald for his signature, he did not notice that the wording for the overdepth pricing had been changed to "50% of the prices specified in Exhibit A [the attached schedule]." Other changes had also been made to Gjehlefald's bid submittal these changes remained unnoticed when Gjehlefald signed the contract. When overdepth work was encountered, the unit price paid by the drainage district was considerably lower than Gjehlefald had expected. He sued to obtain the unit price payments as bid.
Task: Discuss the merits of Gjehlefald position in this case. Which one of the two unit prices at issue i.e. the bid unit price and the ammended unit price in the signed contract should be taken as binding in this case and why?
CASE 2: Depot Construction Corp. v. State of New York (224 N E.2d 866)
Summary: Depot was awarded a lump sum contract to construct a building for the Manhattan State Hospital for a sum exceeding $6 million. The owner's engineer determined that this project included 500 cubic yards of rock excavation, and for any variations from that quantity, the contract would be adjusted at a rate of SIO per cubic yard. The contract sum would be also be adjusted at a rate of $22 per cubic yard for rock excavation in piers and trenches that varied from 600 cubic yard. The total rock excavation was 2,982 cubic yards, which exceeded the anticipated amount. The contractor was paid for the additional rock that was excavated, but the contract rate of pay was not considered sufficient to cover the actual costs of excavation. Depot sued to get the unit prices adjusted. Depot argued that excess rock was beyond the reasonable contemplation of the contracting parties and therefore was not bound by the unit prices, which should be adjusted. The state of New York stated that the contract was clear concerning the unit prices and that no provisions called for unit price adjustments for large variances in quantity. Depot argued that the scope of the work was misrepresented. But the State denied this. The state had taken 17 for the excavation area and had used those findings to compute the quantity of rock to be excavated. Furthermore, bidders were advised that the information on the borings was "presented in good in faith, but it is not intended as a substitute for personal investigation, interpretation, or judgment of the Contractor."
Task: Assume that you are the sitting judge in this case, how would you rule on the case brought by the plaintiff and for what reasons?
CASE 3: City of Baytown v. Bayshore Constructors, Inc. (615 S. W.2d 792).
Summary: Bayshore entered into an agreement with the city of Baytown to install specified sewer lines within 150 days. The agreement stated that certain procedures were to be followed for all changes authorized by the owner. The specified procedures was used on one change but ceased to be used after that. Numerous changes were then authorized which did not follow the specified changes procedures. When the contractor submitted a bill for $312,411 for the extra work, the city refused to pay. The contractor then filed suit.
Task: How should the extensive changes made in this contract outside the specified procedures be viewed by the court? In the light of your conclusion what were the merits of the contractor's position in this case? What remedy, if any, should the court grant?
CASE 4: Standard Construction Co. v. National Tea Co. (62 N. W. 2d 201)
Summary: On March 23, 1946, Standard entered into a contract to build a large, multipurpose warehouse, bakery, and office building for National. The contract award had been accelerated to avoid a building ban that was to become effective 2 days later, on March 25. The ban did not apply to projects on which some construction work had already started. To satisfy this deadline, the design phase had been drastically shortened, resulting in numerous errors and omissions in the contract documents. The construction contract was for a "total cost, not to exceed $1,245,000." This upper limit of the total price was soon abandoned as change orders were issued. Among the 145 change orders issued, 4 became the source of dispute. One dealt with compaction costs of $71,815.66, which Standard claimed were not anticipated. The other three contested change orders related to costs incurred as a result of acceleration. Standard had paid overtime to workers to hasten the project completion: it had also rented equipment for longer periods than originally estimated and had incurred higher costs for concrete placement as a result of winter conditions. Standard claimed that it had advised against the overtime and the winter concrete work, but National insisted that the work had to be done in a hurry.
National argued that some of these costs should have been anticipated as being typical in the industry. The court decided in favor of Standard, ruling that the plans were grossly in error. For example, the building size was increased by about 25 percent, and the project was constructed of reinforced concrete rather than steel as in the original plans. In addition, change orders were occasionally revived by telephone, thus waiving the procedures established by the contract. The problems for National began with the hastily prepared, incomplete plans and were further aggravated by the 24-hour limitation imposed on Standard to bid the project. This culminated in drastic alterations that were subsequently ordered by the owner.
Task: Discuss this case and the lessons to be learned from it.
CASE 5: Donald B. Murphy Contractors, Inc. v. State of Washington (696 P.2d 1270).
Summary: Donald B. Murphy Contractors entered into an agreement with the state of Washington for the construction of two adjacent sections of Interstate 90, east of Issaquah, Washington. The project scope included the laying of new traffic lanes, the demolition of two bridges, the construction of two new bridges, and the construction of several detours. During construction, a record amount of rainfall occurred, causing floodwaters to reach an all-time high level. The floodwaters severely damaged the excavation work Murphy was doing at the time. The worst damage was incurred as a result of the destruction of a diversion culvert that had been designed by the state. The damage had to be repaired before construction could resume. The state paid Murphy for the replacement cost of installing a new culvert. Murphy brought suit for additional funds for the added costs incurred as a result of the delay. Murphy contended that the state had designed the culverts and had thereby warranted their performance. The state was thus to blame for the damage caused by water when the culvert failed. The record amount of rainfall constituted a changed condition as well. The state claimed that the culvert was for temporary use only and that for typical rainfall it would have been adequate. The state also claimed that the heavy rainfall constituted an act of God.
Task: What were the merits of Murphy's position in this case? Was the State liable for delays resulting from the adverse weather as contended by the contractor in this case?
Should the unusual weather not be construed as constituting a changed condition in this case, if so, why? What remedy should the court grant Murphy in this case and why?
CASE 6: Farmer Construction v. Washington State Department al General Administration (656 P.2d 1086).
Summary: On the bid form for a construction project at a reformatory. Farmer had no signature on the bid document; however, the president's name had been typed on the form. Farmer's bid was accompanied by the required bid bond. The state rejected Farmer's bid as being nonresponsive. Farmer filed suit on the premise that the lack of the signature did not invalidate the bid. The state contended that Farmer could claim that its own bid was invalid if it was to its advantage to do so. This was construed as placing Farmer in a unique position not enjoyed by the other bidders. The bid documents were reviewed during the court hearing and it was found that the bid and the bond were in writing and that the two instruments were connected by internal reference.
Task: Was the State right in rejecting Farmer's bid? If you were the judge in this case how would you rule and why?