FALL SEMESTER 2014

Construction Law Midterm Study Guide

1. Federal, State, and Tribal Governments.
The Federal government, the 50 state governments, and the tribal governments.
Essentially each government has its own job and operates independently of the other
governments.
2. Jurisdiction.*
A particular geographic area over which a particular government has power. Refers to a
courts power to hear a case.
3. Branches of Government.
Federal and state government are divided into three parts: Legislative, executive, and
judicial. Legislative branch makes most of the laws, called statutes, effecting the
population. The executive branch enforces the laws made by the legislative branch and
administers many of the laws, usually through administrative agencies. The judicial
branch interprets and clarifies the law and also provides dispute resolution services.
4. Federal Government.
It was formed by the original 13 states in late 1700s and went into operation in 1790.
According the Constitution, the federal government has limited powers, and most
governmental was to be kept at the state level. State government still control many
aspects of the construction industry.
5. State Government.
Every state has its own laws and governs within its geographical boundaries. It establish
counties, towns, cities, townships, and other similar entitles, and they delegate certain
powers to those entities.
6. Tribal Governments.
Exist at the sufferance of the federal government and are ultimately under the control of
the federal government. However, for general application in the construction industry, a
tribal government is a separate government, and tribal laws are applicable within the
reservation.
7. Sovereign Immunity.*
Is an old, common-law doctrine that originally held that no one could sue the king or
sovereign.
8. Constitution.
Establishes a government and outlines what I can and cannot do.
9. Statutes.
Are laws passed by a legislative body. An Act is the name given to several related
statutes passed at one time, such as the Social Security Act. A code is a collection of
related statutes.

10. Regulations.
Laws enacted by administrative agencies such the Environmental Protection Agency
(EPA), an agency of the federal government, and the Department of Transportation
(DOT), an agency of a state government.
11. Judge Made Law, Case Law, and Common Law.
In the event that parties disagree about the meaning of a constitution, statute, or
regulation, a lawsuit can be filed asking a judge to clarify the meaning of that
constitution, statute, or regulation. When a judge clarifies a constitution, statute, or
regulation, the judge makes a law and the name of that law made by the judge has several
names: judge made law, case law, or common law.
12. Maxims of Law and Basic Premises of Contract Law.
Mistakes should be fixed, not taken advantage of.
Parties must come to court with clean hands.
A party must honor its contract or response in reasonable damages.
13. Criminal Law.
Are adopted by societies to protect the society as a whole rather than any particular
individual; criminal law is enforce only the government and individual may not file
criminal actions.
14. Civil Law.
The broad area of law dealing with all noncriminal disputes.
15. Tort law.*
The law dealing with noncontract injuries. The most common tort is negligence.
16. Contract law.*
Is the law that governs the enforceability of contracts.
17. Tort (Injury) Law. *
The law imposes certain duties or obligations upon entities dealing with each other in a
society. Tortfeasor. The person who violated the duty, to compensate the injured party.
18. Contract Law.*
In other words, the law does not enforce a contract duty with the same vigor and zeal as a
tort duty.
19. Dispute Resolution (Test).
Generally refers to one of several different processes used to resolve disputes between
parties, including negotiation, mediation, arbitration, Is the process of resolving disputes
between parties.
20. Rule of law
A principal embodied in democratic societies that power must be exercised in accordance
with the law and that the law should demonstrate certain characteristics.

21. Negotiation No Lawyers Involved.

Is the attempt to resolve a dispute without outside or professional help; the parties discuss
the dispute and come to a resolution.
22. Negotiation Lawyers Involved.
Generally two goals exist: to enforce the legal rights of the hiring entity and/or to resolve
a dispute. Enforcing rights is an extremely expensive goal. Many entities hire a law firm
to resolve disputes. This has the advantage of allowing two or more attorneys to be
assigned the matter.
23. Arbitration.*
A form of alternative dispute resolution in which the parties choose an impartial third
party to hear and decide the dispute.
24. Award.
The decision of an arbitrator; it can be enforced by filing a copy of the award in a court
and following the government provided enforcement of judgment procedures.
25. Mediation.*
A person, called mediator, is hired to help the parties to resolve a dispute. The mediator
does not decide who wins and does not apply the law to the matter.
26. Caucus.
This process of separating the parties is called a caucus and is never used during litigation
or arbitration.
27. Litigation.*
Is the government-provided dispute resolution system and as such is complex, timeconsuming, and costly, both to the parties involved and the taxpayers who pay for the
process. Generally open to the public. The lawyers have a great deal of control over the
litigation process. The judge and jure are, for the most part, observers and make decision
based upon the evidence and legal arguments made by the lawyers. Refers to lawsuits, the
process of filing claims in court, and ultimately going to trial.
28. Adversary system of justice.
A legal system in which the goal of each side in a trial is to win not to find justice or
truth; parties must abide by the law and ethical prohibitions in pursuit of the win.
29. Federal, State, and Tribal Court Organization.
The judicial branch of most governments is divided into three levels or stages: trial
courts, appeal courts, and supreme courts. All lawsuits begin by filing in a trial court.
30. Jurisdiction.*
Is the power or ability of a court to hear a case. Most construction related litigation will
be heard in state courts unless the U.S government is a party to the contract.

31. State Court Jurisdiction.*

Have personal Jurisdiction or power over any defendant who is a resident of or doing
business in that state. State have limited power over residents or businesses of other states
but can hear such cases.
32. Federal Court of Claims.*
If the contractor has a contract with the federal government, any disputes must be filed in
the Federal Court of Claims. If subcontractor are involved, those lawsuits must be filed
in the state court.
33. Diversity jurisdiction. (Test)
Cases involving state law, such as contracts or torts, but only if the plaintiff and the
defendant are from different states and the amount in controversy is over $75,000.00
34. Typical Path Taken by a Lawsuit.
Filing of pleadings, discovery, motion for summary judgment, trial, appeal, and
enforcement of judgment.
35. Plaintiff (Test).
The party starting the lawsuit, files the complaint to commence the litigation. The
defendant files the answer.
36. Discovery (Test).
Allows the two sides in a lawsuit to obtain, before trial, documentary and other evidence
from the opponent. A stage in litigation, after all pleadings have been served, in which
each party seeks as much relevant information as possible about the opposing partys
case.
37. Interrogatories. *
Are written questions from one party to another but cannot be sent to third parties not
involved in the lawsuit.
38. A Request for Documents or Things.
Is sent to another party and requires that party to produce documents or other things for
review or copying.
39. Deposition (Test).
Is a face to face meeting between the attorneys and a potential witness, whether party or
not, in the presence of a court reporter.
40. Summary judgment, summary adjudication, or motion to dismiss (Test).
Is a ruling by the court that no trial is necessary because there are no essential facts in
dispute.
41. Trial (Test).
A dispute resolution process provided by a government. The parties present their dispute
at trial and a resolution of the dispute is imposed upon the parties. Two types of trials
exist: jury trials and bench trials.

42. Judgment (Test).

The judge or winning parties prepares a Judgment, a piece of paper signed by the judge
outlining who has won the case and what they win.
43. Appeal.
The review of a lower courts decision; only issues of law are reviewable on appeal, and
issues of fact are not. The appeal court, consisting of a panel of judges, will review the
trial courts rulings for errors. If the error is significant, the matter can be sent back to the
trial court for retrial.
44. Enforcement of Judgment (Test).
Once the lawsuit and the appeals, if any, are over, the winning party must enforce the
judgment. Neither the judge nor the court system helps the winning party, obtain any
money owed. If the losing party does not voluntarily pay the winning party, the winning
party must take the judgment to the county Marshall or other police agency assigned this
duty and inform the Marshall of the location of the losing partys assets. The Marshall
will then confiscate the assets, sell them, and turn over the proceeds to the winning party.
45. Bench Trial.
Is a jury trial, a jury determines the factual issues and the judge determines the legal
issues.
46. Statutes of limitation Test).
Specify how long after an event a lawsuit can be filed. Each state has its own set of
statutes of limitation. The statute of limitation for breach of contract cases is usually
between four and ten years. NYC 6 years.
47. Statutes of Repose (Test).
Are different from statutes of limitation in that the time allowed for filing a lawsuit
begins to run upon substantial completion of a project and not upon the occurrence of the
injury. Under a statute of repose, the plaintiff is given a certain window of time during
which it can sue the designer or contractor. The time begins to run upon substantial
completion of a project and lasts between 5 and 20 years depending on the jurisdiction.
Owners are not protected.
48. Choice of Law.
Refers to the issue of which jurisdictions law governs the lawsuit or claim.
49. Relief or Remedy (Test).
Generally apply to the list of things, such as attorney fees or punitive damages that a
court can award to a winning party. Examples of relief or remedies include damages,
injunctions, and specific performance.
a. Relief. The most common type of relief is damages or money paid to the injured
party.
b. Injunction is a court order to do or not to so something without involving a contract.
c. Specific Performance is a court order to perform a contract.

CHAPTER 2
50. Mistakes in Bidding (Test).
Obvious mistakes, Mistakes made by the contractor, and Mistakes made by the
subcontractor. As a general statement, the laws attitude is that mistakes should be fixed
if possible and no one should take advantage of the mistake of another.
51. Obvious Mistake.
A bid or contract formed on a bid containing an obvious mistake is voidable by either
party.
52. Voidable.
Means that a party has the option of performing the contract or not, without legal
repercussions.
53. Liquidated damages.*
A specific amount of damages, usually a specific per day, to which the injured party is
entitled; liquidated damages are in lieu of actual damages.
54. Nonobvious Contractor Mistakes in Bid.
The first rule discussed in the section entitled Rescission for Major or Material Mistake
applies to all contracts, both private and government construction.
55. Rescission for Major or Material Mistake. (Test). *
In the event the contractor has made a nonobvious but major or material mistake, the
contractor may void or rescind its bid or the contract formed upon the mistaken bid. If
there is a bi bond, the owner cannot recover on it.
56. Meeting of the Minds (Test).
Requirement that both parties to a contract have the same understanding of what the
contract means before a contract can be formed.
57. Reformation of Mistake (Test).
The contractor can revise the bid or the contract based on the bid for a higher sum.
58. State Law in Selected Jurisdictions.*
Some states follow the federal model and allow contractors to reform a state government
contract. California. Florida grants the contractor to reform the bid if the mistake is made
by an employee of the bidder. Massachusetts, relief is governed by statute and bid deposit
can be returned in case of death, disability, bona fide clerical or mechanical error of a
substantial nature that affecting the general bidder.
59. Nonobvious Subcontractor Mistakes in Bid.
State law governs all contracts between general contractor and a subcontractor; federal
law never applies.

60. Majority or Drennan Rule (Test).

The majority of jurisdiction follow the Drennan rule, which states that if the contractor
has reasonably relied upon the subcontractors bid, the subcontractor cannot rescind or
reform its bid for a reasonable time after award of the general contract even if the
subcontractor has made a mistake.
61. Promissory Estoppel (Test).
A court imposed halt on the imbalance of a situation created by a person reliance on a
promise that lacked consideration.
62. Bid Shopping (Test).
Occur when a contractor attempts to get a subcontractor to lower its bid after the
contractor has been awarded the project.
63. Minority Rule.*
In the minority of jurisdictions, the subcontractor can rescind its bid at any time prior to
acceptance of the bid by the contractor. Courts in these jurisdictions do not apply the
doctrine of promissory estoppel to protect the contractor.
64. Bid.*
An offer by a contractor to an owner or a subcontractor to a general contractor to perform
work or supply materials; a bid is considered and offer under the law of contract
formation.
65. Withdrawal of an offer or bid.*
The law states that and offer or bid can be withdrawn at any time prior to acceptance.
66. Defective Construction (Test).
Is caused by faulty construction practices is a breach of contract, and the contractor is
liable to the owner for damages.
67. Punch List.
Is a list of minor defects or problems in the construction that the contractor needs to fix or
remedy prior to receiving final payment or any retainage.
68. Retainage.
Is an amount due the contractor from a particular invoice but held by the owner and not
paid until the end of the project.
69. Waiver.
Is the knowing relinquishment of a known right.
70. Statute of limitations (Test).
Establishes the period during which a plaintiff must bring a lawsuit against a defendant.

71. Proving causation (Test).

Requires the owner to prove the damage was caused by some mistake of the contractors..
72. Differing Site Conditions or a Type 1.
A condition at the site that varies from what the plans, specifications, or other contract
documents state or pictures.
73. Unforeseen Site Conditions.
A condition at the site that was unforeseen or unexpected; this term is often specifically
define in the construction contract.
74. Basic Premise of Contract Law.
A party must perform its contract or respond in damages and parties are presumed to
know the contents of their contracts.
75. Unforeseen site condition clause.*
A contract clause that transfers the risk of an unforeseen site condition onto the owner.
76. Superior knowledge, concealment, misrepresentation, or fraud.
The contract may be able to use the discovery process to determine whether or not he
owner had knowledge of the unforeseen site condition.
77. Avenues of Possible, but Not probable, Recovery for Contractors if No Unforeseen
Site Condition Clause Exists. Doctrine of objective impossibility, Doctrine of practical
impossibility, Mutual mistake or no meeting of the minds and Differing site condition
argument.
78. Doctrine of objective impossibility.
States that if something is impossible to do, it need not be done, and the failure to do it
cannot be a breach of contract.
79. Mutual Mistake or no meeting of the minds.
A mistake made by both parties as to some fundamental aspect of the contract; no
contract is formed if a mutual mistake has been made.

CHAPTER 3
80. Employment law.
Law relating to the employment relationship.
81. Labor law.
Law relating specifically to unions and the right to unionize.
82. Employment-at-will.
States that the employer may hire or fire an employee for any reason or no reason. In
addition, the doctrine states the employee may quit for any reason or no reason.
83. Illegal Discrimination.
Is discrimination based on race, creed, sex, religion, national origin, citizenship,
disability, pregnancy, union membership, or age.
84. Protected class.
A term used in employment law to refer to people in the group that is protected from
illegal discrimination.
85. Legal discrimination.
Is based on any other reason such as other reason such as discrimination based on
experience, education, family relationship, congeniality, or any other valid reason for
discriminating between employees or potential employees.
86. Bona fide occupation qualification.
A legitimate requirement that a person applying for or holding a particular job have some
characteristic that would normally be classified as illegal discrimination.
87. Public Policy Exception to Employment at Will.
Refusing to break the law.
Whistleblowing, or informing government authorities when the employer has
broken the law.
Exercise of a public right, such as voting or filing a claim.
Exercise of a public duty, such as jury duty.
88. Affirmative action.
89. Hiring immigrants and Day Laborers.
All employees must fill out an I-9 Employment Eligibility Verification form. Example: If
a contractor hires illegal day labor to complete a construction project. The workers are
covered by the Fair Labor Standard Act and all other laws.
90. Employ handbooks.
Mya contain detailed explanations of the procedures that a company must use prior to
disciplining or terminating an employee. The company must follow all procedures as
outlined in the employee handbook.

91. Non-compete and nondisclosure agreements.

Limit an employees option for new employment upon termination of the prior
employment. Nondisclosure agreements attempt to prevent employees from using trade
secrets of their former employers when they take a different position.
Non-compete agreements are for a reasonable time period and are limited to a reasonable
geographical location. An agreement preventing a former employee from ever engaging
in competing work upon termination from employment would not be upheld.
92. FMLA.
This act requires employers with 50 or more employee to permit employees to take up to
12 weeks each year of unpaid leave in order to care for a new child, a family member
with a serious health condition, or because of the employees own serious health
condition.
93. FSLA 1938.
Requires employers to pay employees a minimum wage and to pay certain employees
overtime pay for work in excess of 40 hours per week. Does not apply to executives,
administrators, professionals, or those with advanced knowledge unless they make less
than $455 per week.
94. OSHA 1970.
Occupational Safety and Health Act of 1970 was passed to improve work-place safety
and to encourage healthful working conditions.
95. ADA.
Prohibits discrimination against, and requires reasonable accommodation of, the disabled
in job application, hiring, advancement, discharge, pay, training, and other terms,
conditions, and privileges of employments.
96. Workers Compensation Law:
Which provides medical coverage for employees injured on the all states require workers
compensation.
97. Sexual Harassment Quid pro quo:
It is a demand for sexual favors in exchange for a job related benefit.
98. Sexual Harassment hostile work environment:
Exists when the work environment is characterized by severe or persistent sexually
offensive conduct.
99. Invasion of privacy:
Includes four different torts: intrusion into seclusion, false light, public disclosure of
private facts, and appropriation of anothers name or likeness.