Be Careful with Venue in Contracts

Originally posted 2010-03-05 09:00:56. Republished by Blog Post Promoter

Be Careful with Construction ContractsIf Musings has one overarching theme it is be careful with your construction contracts. The Courts remind us of that on a regular, if not daily, basis.

One such case, in May of this year and out of the Eastern District of Virginia is Hall & Wilson Construction, Inc. v. Sockwell. Sockwell is a good reminder that contractors should make sure to both include a written change order provision in their contracts and (importantly) follow that provision.

In Sockwell, Hall & Wilson filed a breach of contract action in the Eastern District of Virginia. The initial written contract was for an addition to the Sockwells’ office building. After completion of some fire repairs and the addition, Hall & Wilson sued for non-payment under the Contract and an invoice for “Homeowner Extras.” The last invoice for the extras was an add on to the initial contract for work that was performed without a written change order.

In response, the Sockwells, North Carolina residents who executed the initial written contract in North Carolina, claimed that the Virginia court was the wrong place to resolve the dispute.

The Court found that, while it had jurisdiction over the dispute that venue was improper. The Court stated that the “Homeowner Extras” were the only properly disputed items and that the Contract’s venue provisions requiring venue in Virginia did not apply because these last items were a new contract. The Court based this final conclusion on the lack of a written change order and the full payment by the Sockwells of all prior charges. The Court then dismissed the case.

Essentially, in this case, the contractor could not pursue its claim because it did not follow the change order provisions of its own contract. While I do not know if the decision would have been different had the “Homeowner Extras” been the subject of a written change order, I can tell that the Court would have had a much harder time dismissing this case.

In sum, make sure that you have a good venue and jurisdiction provision in your contract and be sure to follow your change order provisions to avoid such adverse consequences. As always, consultation with an experienced construction lawyer will help assure that your contracts are written as they need to be.

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