Contract Law and Contract Administration
Formation and the writing requirement
A contract needs offer, acceptance, consideration, capacity, and a lawful purpose. Tennessee's statute of frauds requires certain agreements to be in writing - notably contracts that cannot be performed within one year and promises to answer for another's debt. The written contract generally controls, so the order of precedence clause (contract, general conditions, specifications, drawings) decides conflicts.
Administration is where money is won and lost
- Changes: most contracts require written change orders; proceed-on-directive language lets work continue while price is negotiated, but notice deadlines still apply.
- Notice: failure to give timely written notice of delay, differing site conditions, or a claim is the single most common defense used to defeat an otherwise valid claim.
- Differing site conditions: Type I is a subsurface condition materially different from the contract documents; Type II is an unusual condition differing from what is normally encountered.
- Payment: know whether a clause is pay-when-paid (timing) or pay-if-paid (risk transfer).
- Damages: liquidated damages must be a reasonable forecast of loss, not a penalty.
- Completion: substantial completion triggers warranty, retainage, and liquidated-damages cutoff; final completion triggers final payment and release of retainage.
Interpretive rules
Ambiguities are generally construed against the drafter; specific provisions control general ones; written terms control printed forms; custom and usage can fill gaps but not contradict clear language.
Trap
Questions often describe a verbal direction from an owner's representative. Without the contract's written-change procedure, the contractor carries the risk of nonpayment.
Rule of thumb
Read the notice clause first. A claim is only as good as the paper trail behind it.