Imagine three months after completion of construction, your client finds a significant leak in the recently completed roof of its new building. Unable to resolve whether the leak is a result of a construction defect or a design flaw, you are told to commence an action against both the project contractor and the design architect. Unfortunately, your client’s agreement with the contractor requires the owner to resolve all disputes in litigation; the agreement with the architect requires that all disputes be resolved through arbitration. Careless contract drafting now has your client facing the cost of two separate actions. What is more troubling, however, is that the money spent on the two actions could be wasted if the court finds that the leak is a result of a design flaw (and exonerates the contractor), but the arbitrator finds that the leak is a result of a construction defect (and exonerates the architect ). The result of the inconsistent decisions is that your client is compelled to pay for the leaking roof.
The above scenario is not unlikely, inasmuch as the early stage of construction projects often encourages a compartmentalized approach to contract drafting and a myopic perspective of the individual contracts. Typically, in a general contract delivery method, a project owner first contracts with an architect to design the project and provide construction drawings by which the project owner can bid out the project to prospective contractors. Months later, the project owner will bid the job and eventually award a contract to the general contractor. Also, at other point during the course of the project, the owner may contract with engineers, other design professionals and possibly other trade contractors. The staggered approach and the length of time between contracts lends itself to the potential for inconsistency among the various contracts.
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