T/F Novation means substitution, usually of the parties in a construction contract. T/F Subjective impossibility is an acceptable excuse...

  T/F     Novation means substitution, usually of the parties in a construction contract.

  T/F     Subjective impossibility is an acceptable excuse for failure to perform a contractual obligation.

PART IV:  Case Study Analysis (6 points each, total 30 marks).

Case # 1           

Peerless Casualty Co. v. Housing Authority of the City of Hazelhurst, 228 F. 2d 376 (5th Cir.1955)

Background: The contractor Ivey submitted a bid in the amount of $463,733.  It was in response to an invitation for bids that contained the following requirements:

1.     A certified check or bank draft …or a satisfactory bid bond executed by the bidder and acceptable sureties in an amount equal to 5 percent of the bid, shall be submitted with each bid.

2.     No bid shall be withdrawn for a period of thirty days, subsequent to opening of bids without the written consent of Hazelhurst.

Ivey’s bid was low and was accompanied by a bid bond.  On the day following the opening of bids, Ivey discovered an error (which was not obvious), he advised the owner in writing of the error, and withdrew its bid. The owner had not yet accepted the bid but had adopted a motion to accept “subject to approval of the Public Housing Administration.” The owner called on Ivey’s bid bond and contracted with the next lowest bidder.  However, the surety for Ivey’s bond, disputes the owner’s action arguing that there was no liability on the part of the bidder Ivey and hence none on the part of the surety.

Task: Carefully analyze the positions of the parties in this dispute. What legal issues are involved in this dispute? Who should prevail and why? Would it have made any difference to the owner’s position, if it had paid a nominal sum to each bidder to hold the bid irrevocable for a fixed period as directed in the invitation for bids? What, in fact, were the implications of the owner’s adoption of a motion to accept subject to approval of the Housing Authority?

Case # 2

City of Seattle v. Dyad Construction Inc. ( 565 P.2d 423)

Background:  This dispute occurred over a contract involving a sewer line project.  The contract included provisions that stated that delays were to be compensated” for a period equivalent to work time lost.” The sewer line was being installed along Seola Beach, with the trench being dug through sand and gravel in tidal flats as staked out by the City survey crew.  The path of the trench ran between the base of a bluff on one side and the tidal flats on the other. The work could be performed only during favorable low tide.  During the trenching operation a landslide occurred behind the backhoe performing the excavation work. Dyad stopped work and asked the City to redesign the alignment of the pipeline so that it was further out on the beach.  The Washington State Labor and Industries safety inspector also considered the project unsafe.  Eight months later the City approved a new plan for the sewer line location.  The project was completed 4 months behind the original schedule. Dyad sued for damages caused by the delay, which occurred through no fault of its own.  The City claimed that the contract was clear and that the contractor was entitled only to a time extension.  Dyad claimed that the provision dealt with only foreseeable delays at the time the contract was signed.  Not only were the delays that were encountered unforeseeable, they were of unreasonable length. 

Task:   Carefully analyze the positions of the parties in this dispute.  Be sure to succinctly identify the issue(s) in dispute.  If you were the presiding judge, in this case how would you rule and why? 

CASE # 3:

            Massachusetts Bonding and Insurance Co. v. Lentz, 9 P.2d 408( Ariz. S.C. 1932)

Background: A contractor entered into a written agreement to construct a building according to plans a specifications prepared by the Architect, Nolan.  It was expressly stipulated that the owner should not be liable for any extras or additions to the contract unless pursuant to a written order signed by the owner or a written order from the architect stating that the owner has authorized the change. 

The architect orally approved some changes which were performed by the contractor.  The contractor seeking to recover for these extras filed a court action arguing that the architect was acting as agent for the owner, and therefore the owner was bound by the requests for extras made by the architect. 

Task: If you were the presiding judge, how would you rule in this case and why?

Would your decision have been different if the architect had signed the orders and stated that the owner had authorized them? In the latter case, would the owner have had any recourse? Explain.

Does the contractor have any recourse against the architect?

How would the contractor prove that the owner had waived the provision of the contract?

Case # 4

  Situation: John, a consulting soil engineer, submitted a draft report on the soil conditions at a plant site to his client’s chief engineer.  The chief engineer read the draft and indicated to John that he wanted several portions of the report changed so that the planned building could be designed with smaller, less expensive foundation.  The chief engineer told John the allowable soil pressure value he wanted him to recommend in the final report. 

            Following this meeting John went back to his office to decide what to do.  He believes he has the four alternatives as follows:  

(a)    Submit the draft soil report as the final report without any changes.

(b)    Reexamine his field test data to see if the chief engineers desired allowable soil pressure value could be recommended.  If so, he would do it.  If not, he would leave the report as it is.

(c)    Make changes requested by the client’s chief engineer and submit the final report.

(d)    Write to the president of his client’s firm and describe the request of the chief engineer.  Advise the president that the draft report is being submitted as the final report.

Task:    Carefully analyze John’s dilemma and explain which, if any, of the four alternatives listed above John should take. In outlining your reasoning be sure to identify the applicable stipulations of the NSPE Code of Ethics.

Case # 5

Situation:  The following incident allegedly occurred in the aircraft industry.  A mechanical engineer from Company A had conducted tests of a certain aircraft tail assembly configuration in his company’s wind tunnel and knew that devastating vibrations could occur with that configuration under certain circumstances, leading to destruction of the aircraft.  Later, at a professional meeting, Company A’s engineer heard an engineer from Company B, a competitor, describe a tail assembly configuration for one of Company B’s new aircraft which would run the risk of producing just the kind of vibrations which Company A’s engineer had discovered in his tests.  However, the engineer from Company B does not seem to be aware of this potential problem.  The engineer from Company A has an obligation, both as a matter of morals and of law, to maintain company confidentiality regarding Company A’s proprietary knowledge.  On the other hand, engineers are supposed to bear a responsibility for public safety and welfare.  If the engineer from Company A remains silent, Company B may not discover the possibility of the existence of destructive vibrations until a dreadful crash occurs, killing many people.

Tasks:   Discuss this case, makingsurethat among other things you address the following questions:

  i) What would you do if you were the engineer from Company A? 

 ii) What follow-up action would you take if your initial action was unsuccessful?

 iii) What are the limits (if any) beyond which you would not go?

 iv) Justify your reasoning by reference to the applicable clauses of the NSPE Code of Ethics.  

PART V (a):    10 marks

Situation: An electrical contractor put together an estimate on an addition to a country club.  The bid that was submitted to the general contractor on this cost reimbursable contract was $2,160,000 that represented a combination of $960, 000 in labor and $1,200,000 in material costs. Before a formal sub-contract agreement was signed, the project got delayed due to financing complications.  The project was delayed for nearly a year.  Later the general contractor asked the electrical contractor if the firm was still interested in working on the project.  The response was that the firm was still interested, but that cost of materials had risen by $80,000 and that the bid should be commensurately be increased. This was accepted by the general contractor, who indicated that a formal subcontract agreement for $ 2,240,000 would be forth coming in the mail. Harry was the estimator was the estimator for the electrical contractor who negotiated this contract with the general contractor.  Harry was approached by Aaron, a fellow estimator, who was concerned about the contract pricing arrangement.  Aaron said that he had reexamined the estimate and discovered that the labor for one part of the project had been counted twice, resulting in an extra $60,000 in the bid.  Harry said that this was just fortuitous for the company.  The general contractor had accepted the original bid with the extra $60,000 in it and the new contract was no different.  Aaron was suggesting that the $80,000 increase in material cost should be balanced against the $60,000 inflated amount in the labor costs.  Harry did not agree.

Task:  Discuss this case. In particular how should this contracting company handle this dilemma?  Is it unethical for the company to reap the benefits of its own estimating error?  Which stipulations of the NSPE code of Ethics are applicable?

PART V(b):  10 marks

List at least five distinct attributes that you believe distinguish the professions from other occupations.

Is engineering a profession?  How does it fit the social-contract model of the professions?

What is the role of licensure in the engineering profession? How important  is the commitment to life-long learning in the engineering profession and why?