Construction contracts for public improvements are notoriously tough on contractors. They are designed to avoid waste of public funds and protect the integrity of the bidding process. They cannot be negotiated; if the bidder is unhappy with the terms of the contract, it can simply not bid on the project.

 

To make matters even more difficult for contractors, these contracts often come with extremely tough notice provisions. Even when the terms of the contract are bearable, the unforgiving notice provisions often entrap unwary contractors who are more focused on building the project than sending notice letters.

 

In a recent case involving an abatement and painting contract for the NYC Housing Authority, a contractor found itself with multiple payment disputes and few, if any, written notices of claim. With no alternative, it scoured its emails to the Housing Authority, looking for anything that may have included enough information to satisfy the contractual notice requirements.

 

The contract provided that the contractor must provide the Housing Authority with a notice of claim for extra costs or damages, stating the nature and amount of the extra costs or damages sustained and the basis of the claim, all within 20 days after such claim arises. It further provided that such notice was a “condition precedent” to an action seeking damages—magic words indicating that without such notice no claim could survive.

 

The appellate division hearing the case observed that notice requirements in public contracts will be strictly enforced to avoid the waste of taxpayer money. Here, it found the emails to be insufficient to satisfy the contractual notice requirements. It stated that the emails did not identify themselves as “notices of claim” (a troubling requirement seemingly not expressly required by the contract), did not contain all the required information in a single document, and did not express a clear intention to bring a claim against the Housing Authority. Nor did the contractor’s addition of the phrase “all rights reserved” in the email aid its cause.

 

The ultimate indignity was the statement by the court that even the Housing Authority’s actual knowledge of the contractor’s claims did not waive the notice requirement. Section 56 of the contract provided that no provision of the contract can be waived except by a resolution of the Housing Authority Board.

 

Because it failed to produce any document that strictly complied with the notice requirements of the contract, the contractor’s claims were deemed waived and its action was dismissed.