Category Archives: St. Louis Construction Law Attorney Shares

7 Important Tips Roofing Contractors Should Know Before Performing Work in Missouri

The purpose of this article is to provide roofing contractors a general overview of some common compliance issues that roofers experience when conducting business in the state of Missouri. In hopes that businesses and contractors will have better statutory compliance in the future and to reduce customer complaints and unscrupulous business practices, we have prepared a general rundown of some caveats and tips that contractors should be aware of when carrying out roofing work in Missouri.

1.     Do not offer to pay any part of the customer’s deductible or provide a discount or rebate as part of the roof sale

Although you could sell the job a lot easier if the customer had no out-of-pocket expenses, Missouri law prohibits contractors from offering to pay the insurance deductible or otherwise creatively working around the statute.

The specific statute set forth under section 407.725.6, R.S.Mo., states:

“A contractor shall not advertise or promise to pay or rebate all or any portion of any insurance deductible as an inducement to the sale of goods or services.  As used in this section, a promise to pay or rebate includes granting any allowance or offering any discount against the fees to be charged or paying the insured or any person directly or indirectly associated with the property any form of compensation, gift, prize, bonus, coupon, credit, referral fee, or other item of monetary value for any reason.” R.S.Mo. § 407.725.2 (2014);

As you can imagine, unscrupulous contractors regularly attempt to employ this tactic on unwary customers. Replacing a roof is a lot more appealing for the customer when the customer has no expenses. However, the Missouri legislature found that the negative impact on society outweighs the benefit and have prohibited such conduct. Accordingly, roofing contractors should not utilize such techniques or make any of the above-mentioned offerings to induce the customer into entering into the contract.

If you have questions regarding advertising or the legality of other sales techniques, please do not hesitate to contact us.

2.     Do not offer to negotiate insurance claims for customers

While it may seem natural to speak to the insurance company on behalf of the customer, such conduct is prohibited in Missouri.

The statutory section, 407.725.6, R.S.Mo., which bars such conduct, states the following, in relevant part:
“A contractor shall not represent or negotiate, or offer or advertise to represent or negotiate, on behalf of an owner or possessor of real estate on any insurance claim in connection with the repair or replacement of roof systems, or the performance of any other exterior repair, replacement, construction, or reconstruction work.” R.S.Mo. § 407.725.6 (2014);

The consequence of representing or negotiating on a customer’s behalf will likely constitute a violation of the Missouri Merchandising Practices Act and could evoke a response from the Missouri Attorney General or could potentially lead to punishment for the unauthorized practice of law.

If the customer has a valid insurance claim due to hail or storm damage or some other covered claim, you should make your observations and analysis and refer the homeowner to competent legal counsel to assist with obtaining coverage from the insurance company. Do not risk the potential consequences that can result from violations of the Missouri Merchandising Practices Act. The risk is not worth the reward. If you have questions regarding your statutory duties or questions about insurance contract negotiations.

3.     Include Statutory Lien Notice in your Contract

Although many contractors do not know how mechanic’s liens work, they do know that mechanic’s liens can be an effective tool to collect payment on an outstanding balance from owners or other contractors. Depending on the situation, mechanic’s liens can be instrumental in getting you paid. Thus, it is critical to ensure that you preserve the right to file a mechanic’s lien on your project. Missouri mechanic’s liens can be trick and have a few rigid statutory requirements.

One of the most important requirements of filing a mechanic’s lien is providing proper notice. Missouri requires general contractors to provide notice to owner as a prerequisite or a condition precedent to filing a mechanic’s lien. Specifically, the applicable portion of section 429.012, R.S.MO., states the following:

Every original contractor, who shall do or perform any work or labor upon, or furnish any material, fixtures, engine, boiler or machinery for any building, erection or improvements upon land, or for repairing the same, under or by virtue of any contract…shall provide to the person with whom the contract is made or to the owner if there is no contract, prior to receiving payment in any form of any kind from such person, (a) either at the time of the execution of the contract, (b) when the materials are delivered, (c) when the work is commenced, or (d) delivered with first invoice, a written notice which shall include the following disclosure language in ten-point bold type:



Any contractors who collect payment of any type on a construction project without first having provided the above-cited notice will have waived their right to file a mechanic’s lien. This does not preclude you from pursuing the owner or contractor under breach of contract or quantum meruit claims. However, it is well-advised to preserve all of your rights, so you have these respective collection tools at your disposal in case you need them. Accordingly, this notice to owner must be provided by any general contractor on the project that wants to later assert mechanic’s lien rights against the property upon which the work was performed.

4.     Include a provision in your contract that allows for the recovery of attorney’s fees

In Missouri, parties to a lawsuit can typically only recover attorney’s fees if there is some statutory or contractual basis providing for the recovery of the same. Alternatively, if there is an incredibly unique situation where equities have to be be balanced or if litigation occurs as the result of a wrong committed by a third-party, courts may allow the recovery of attorney’s fees. “Generally, awards of attorney’s fees are permitted “only when called for by a contract; when provided by statute; when incurred as an item of damages because of involvement in collateral litigation; or ‘when a court of equity finds it necessary to adjudge them in order to balance benefits.’” Boone Valley Farm, Inc. v. Historic Daniel Boone Home, Inc., 941 S.W.2d 720 (Mo. App. 1997).

Nearly every roofing contractor that calls seeking counsel asks whether they can recover attorney’s fees. Many of those contractors find that they do not have any basis for recovering attorney’s fees.

This is an easy fix, however, but it has to be implemented before the project by including the provision into the contract. A contract that includes an attorney’s fees provision gives the contractor significantly more leverage when pursuing their claim.

Obviously, the factual situation must also be evaluated because there may be some statutory basis to recover attorney’s fees despite not having the desired contractual language.  However, generally speaking, there is typically no recovery of attorney’s fees on residential projects, unless the attorney’s fees provision is in the contract, whereas there may be a right to recover attorney’s fees on a commercial project by way of the Missouri Prompt Payment Act.

For purposes of this article, we will not discuss the Missouri Prompt Payment Act. However, you should take heed to the warnings contained in this article, avoid the potential loss of leverage if the case goes to court, and protect yourself by including an attorney’s fees/costs/expenses provision in your contract. That goes for contracts with homeowners as well as those with subcontractors.

If you have questions about drafting up an attorney’s fees provision or other contractual provisions, please contact us.

5.     Include a provision that allows for the collection of interest on outstanding balances

When someone refuses to pay you, it is frustrating feeling. Not only do you want to recover the balance, but you also want to tack on an extra $100 per day or charge them anything and everything you can. The only way to get equitable recourse during the pursuit of an outstanding debt is to have the debt accruing interest. Another tool to increase the pressure is the inclusion of a liquidated damages provision. Liquidated damages are discussed at length in another article on this website, but the focus of this article is to express the importance of including an interest provision in all roofing contracts.

The industry rate that we typically see is 1.5% per month or 18% per annum interest rate on outstanding balances. That means that if you are owed $10,000 for a year, you would be entitled to collect $1,800 per year in interest in addition to the $10,000 principal amount owed. This is critical especially when many lawsuits can be stretched out over the course of a one to several years. The interest provision creates leverage against the debtor to pressure them into paying the amount that is rightfully due. Alternatively, if the case goes to trial and you prevail, the debtor will have to pay the principal and the 18% interest on that principal.

If you need help collecting from someone who owes you money for work performed, please contact us now.

6.     Form a Missouri Limited Liability Company to provide protection and to have standing to pursue any legal claims the company may have

A limited liability company can be formed under chapter 347 of the Missouri Revised Statutes. In order to be afforded limited liability protection in the state of Missouri, the organizers/management of a company must register with the Missouri Secretary of State.

Additionally, the Missouri Courts will not recognize a business entity that is not registered in the state. Thus, if the contractor is dealing with a non-paying customer, the contractor will have to standing prior to instituting a formal lawsuit in court. In order to have standing in Missouri, a limited liability company, including any roofers, whether individuals, entities, or contractors, conducting business in the state of Missouri, must register their company with the Missouri Secretary of State.

Many banks will not allow you to open a company bank account without first creating an LLC and preparing an operating agreement, obtaining an articles of organization and an EIN. Additional, there may be tax ramifications on a state and/or federal level for those companies who fail to register their LLC and/or obtain an EIN.

For numerous reasons, it is important to take care of the LLC formation and getting all of your other organizational documentation and affairs in order before conducting business in Missouri. If you need assistance in setting up or modifying an existing business, LLC, or corporation, please contact one of our lawyers for further assistance.

7.     You must allow customers who are paying through their insurance company the opportunity to cancel the roofing contract within 5 days of receiving acceptance or denial from insurance company.

Contractors have to give customers the opportunity to cancel the roofing contract in the event that the insurance company denies their claim.

The relevant portion of section 407.725.3, R.S.Mo., states:

“A person who has entered into a written contract with a contractor to provide goods or services to be paid under a property and casualty insurance policy may cancel the contract prior to midnight on the fifth business day after the insured party has received written notice from the insurer that all or any part of the claim or contract is not a covered loss under the insurance policy.”

Failure to give the customer the option to cancel the contract will be deemed a violation of the Missouri Merchandising Practices Act. Violations of the Missouri Merchandising Practices Act can come with steep consequences and a serious headache that takes the focus off of running your business.

Please call if you have questions regarding statutory or contractual rights relating to roofing jobs.


This article was intended to inform the general public and roofing contractors about some of the important issues surrounding roofing projects and associated contracts/documentation. The article covered several provisions that should be included in roofing contracts as well as certain acts that are prohibited pursuant to Missouri law.

Specifically, the article discussed:

  1. Not using deductibles as a way to induce roof sales;
  2. Refraining from negotiating or representing customers in the insurance claims process;
  3. Include the statutory mechanic’s lien notice in your contract;
  4. Include an attorney’s fees provision in your contract;
  5. Include an interest provision in your contract for outstanding balances.

For those roofing contractors who follow these suggestions, so long as you are generally complying with OSHA requirements, other general statutes, and otherwise conducting fair business, your approach will comport with best business practices in the roofing industry.

If you need assistance or specific guidance from a Missouri construction law attorney, please do not hesitate to contact us. We offer free consultations and can provide you direction in how to move forward in your case.

Please call us now if you’re looking to learn more about your rights as a contractor.

Construction Terms Glossary with Missouri References

This is a basic glossary of commonly used terms in the construction world. The descriptions and definitions were not meant to be comprehensive but rather a summation of a number of fairly complex terms and concepts.

The Missouri law cited throughout this article may not be the most up-to-date information available. It is always advised to consult with an attorney or keycite the referenced case(s) or laws to confirm that the law is in fact authoritative.

This article was strictly intended to be a resource for Missouri contractors and the general public who are interested in learning more about construction law in Missouri.

1.     All-Risk Builders’ Risk Insurance

All-Risk Builders’ Risk Insurance is a type of insurance that is designed to account for a number of occurrences that cause damage to the building, usually including machinery, equipment, materials, supplies, and fixtures that are appurtenant to the structure. This usually does not include insurance coverage defective work (but oftentimes will for ensuing damages).

When referring to all-risk insurance, there’s a “general understanding…that ‘recovery under an ‘all-risk’ policy will, as a rule, be allowed for all fortuitous losses not resulting from misconduct or fraud, unless the policy contains a specific provision expressly excluding the loss from coverage.’” Missouri Commercial Inv. Co. v. Employers Mut. Cas. Co., 680 S.W.2d 397, 400 (Mo. Ct. App. 1984)(citing 13A G. Couch, Cyclopedia of Insurance Law § 48:141 at 139 (R. Anderson 2d ed. 1982). See also : Annot., 88 A.L.R.2d 1122, 1125 (1963)).

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2.     Arbitration

A form of alternative dispute resolution that is used as a vehicle for resolving disputes on a construction project or with a construction contract (though not specifically limited to construction disputes), in which an arbitrator is chosen and decides the matter. Often times the evidentiary and procedural standards are more lenient in an arbitration as compared to a case that is litigated through the court system. This also typically saves the parties money as the case is expedited and does not typically demand the heavy motion and discovery process involved in a formal court proceeding.

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3.      Architect

An architect is a person who is licensed by the Missouri Division of Professional registration (in Missouri) to practice architecture. Typically, to qualify for the licensing application, an architect must have a degree in Architecture from a school or university that is accredited by the National Architecture Accrediting Board.

The architect usually facilitates the completion of the project by performing an evaluation of the project requirements and communicating with the general contractor to ensure that the work is performed in compliance with the specifications.

The architect is also usually in the best position to communicate with the general contractor regarding such matters as the architect is often responsible for preparing the specifications and designs.

On certain projects the architect will also be involved with evaluating pay applications or working with the owner or its representative to ensure that proper payment is made.

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4.     At-Will Employment

A type of employment in which an employer can terminate the employee at any time. The employer does not have to have reason for the termination.  Equally, the employee does not have an obligation to stay with the company and can leave at any time.

In most cases, when engaged in an employment-at-will relationship, the employer can terminate the employee for virtually any reason.

However, in Missouri there are certain safeguards. The Missouri Human Rights Act, section 213.055, states: It shall be an unlawful employment practice: “For an employer, because of the race, color, religion, national origin, sex, ancestry, age or disability of any individual: (a) To fail or refuse to hire or to discharge any individual…” R.S.Mo. § 213.055.

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5.     Bid

A formal offer to a general contractor or the owner to perform certain work set forth in the contract, its terms and conditions, specifications, and any other documents incorporated therein.

On a construction project, the bid would typically require the bidder to furnish all labor, materials, and other necessaries on the project and reach substantial completion in the time prescribed in the contract documents.

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6.     Bid Bond

A bid bond is a type of bond the ensures that the contractor will perform the specified work at the bid price. Once the contractor secures the job by entering into a contract with the owner, the contractor and surety are absolved from duties to satisfy the contractor’s inability to carry out the bid. At that time, the contractor is typically required to purchase a payment and performance bond, which would be the party responsible for making payment in the event of any subsequent failure to carry out the terms and conditions of the contract.

Bid bonds are required on a number of public projects in Missouri. For example, in Missouri the statute requires 10% down or requires a bid bond “[w]henever it shall be ordered by the county commission, township board or district commissioner, as the case may be, that any road, bridge or culvert in the county be constructed, reconstructed or improved or repaired by contract, and the engineer’s estimated cost thereof exceeds the sum of five hundred dollars…”

The specific statute is R.S.Mo. § 229.050, and with respect to the aforedescribed requirements of 10% or a bid bond, states the following, in pertinent part:

“All bids shall be accompanied by a certified check equal to ten percent of the engineer’s estimate of cost, payable to the county treasurer, to the use of the county, township or road district, as the case may be, or a bidder’s bond executed by some surety company authorized to do business in this state or other good and sufficient surety in a like sum shall be given, as a guarantee on the part of the bidder that if his bid be accepted he will, within ten days after receipt of notice of such acceptance, enter into contract and bond to do the work advertised, and in case of default forfeit and pay sum of ten percent of the engineer’s estimate of cost.” R.S.Mo. § 229.050.3

In the State ex rel. Missouri State Highway Comm’n v. Hensel Phelps Const. Co., the Missouri Supreme Court case cited a California case to express its rationale in determining that a contractor can rescind a bid and be relieved from the obligation to perform on the project:

There is a difference between mere mechanical or clerical errors made in tabulating or transposing figures and errors in judgment, as, for example, underestimating the cost of labor and materials. (Emphasis added) The distinction between the two types of errors is recognized in the cases allowing rescission and in the procedures provided by the state and federal governments for relieving contractors from mistakes in bids on public work. (Citations omitted) Generally, relief is refused for error in judgment and allowed only for clerical or mathematical mistakes. (Citations omitted) Where a person is denied relief because of an error in judgment, the agreement which is enforced is the one he intended to make, whereas if he is denied relief from a clerical error, he is forced to perform an agreement he had no intention of making. State ex rel. Missouri State Highway Comm’n v. Hensel Phelps Const. Co., 634 S.W.2d 168, 171 (Mo. 1982)(citing M. F. Kemper Construction Co. v. City of Los Angeles, 37 Cal.2d 696, 235 P.2d 7 (1951).

The Court in State ex rel. Missouri State Highway Comm’n v. Hensel Phelps Const. Co. stating that “[i]f a contractor is allowed to rescind its bid, the bid bond would be cancelled. Certainly, the state may not require forfeiture of the bid bond either as a penalty or liquidated damages if the contractor has no legal obligation to fulfill its bid.” State ex rel. Missouri State Highway Comm’n v. Hensel Phelps Const. Co., 634 S.W.2d 168, 171 (Mo. 1982).

The Court went on to perform an analysis to determine whether the contractor had a right to rescind its bid. The Missouri Supreme Court ultimately deferred to the decision reached by the jury, which was in favor of the Missouri commission.  The ultimate legal holding by the Missouri Supreme Court was that the contractor could not rescind the contract based on a unilateral mistake and therefore could not avoid forfeiting the bid bond to the Commission.

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7.     Bid Documents

The bid documents is a general term used to describe the bid package prepared by a contractor in an effort to secure a construction contract.

Some of the documents that may be included in the bid documents include, but are not limited to:

  • An invitation to bid
  • Bid sheets
  • Bidder’s Questionnaire regarding experience
  • Proof of Financial Responsibility or ability to obtain adequate insurance/bonding
  • Bid instructions
  • Bid Schedule
  • Contract
  • Specifications incorporated into the contract
  • Addenda
  • Any documentation incorporated into the contract
  • Any documentation that would modify amount of time or price of project

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8.    Bid Peddling

Bid peddling is when a subcontractor, who was not the lowest bidder after the first round of bidding, offers a lower bid price to secure the award of the contract from the general contractor.

Bid peddling is when subcontractors will offer to perform the work for a lower amount contractor a lower amount than their original bid to secure the award of the contract from the general contractor. Usually the general contractor may entertain these subsequent bids to create cost savings for the general contractor, but bid peddling, in some cases, can also save the general contractor money.

Bid peddling is a practice that is not encouraged and could subject those implementing such practices to potential liability. Accordingly, it is good practice to simply move onto the next project and avoid interference or some type of tortious interference claim against you.

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9.    Bid Rigging

Bid rigging occurs when contractors conspire by submitting their bids in a manner aimed at driving up or rigging the bid to increase the amount that the lowest bidder submits and is thereby awarded. This type of behavior is unethical in that it is conspiring with other contractors to manipulate the system.

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10.  Bid Shopping

Bid Shopping is when the general contractor receives the first round of bids and takes those bids to the other bidding subcontractors to leverage lower bids from those subcontractors. In extreme circumstances, a contractor or subcontractor may try to create a bidding war between the other bidders to drive down the price by creating a competitive dynamic between them.

“Bid shopping occurs when a general contractor solicits estimates from specialty contractors to compute his lump sum bid and then, after being awarded the contract, again canvasses the specialty contractors in an effort to obtain prices lower than those previously given. This practice may deprive the specialty contractors who strove to be the first round low bidders from receiving the work after the wheeling and dealing in the second round. Moreover, the general contractor realizes savings rather than the owner, unless the general contractor lowered his initial bid anticipating that he could procure the specialty work at less than the estimated prices. Further, fierce competition in the second round may result in underbidding by the specialty contractors and consequent shoddy work as they attempt to keep costs within their bid.” Nash, Jr. and Love, Jr., Innovations in Federal Construction Contracting, 45 Geo. Wash. L. Rev. 309, 315 (1977).

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11. Boilerplate Provisions

Boilerplate provisions are what the average person might refer to as the fine print. Boilerplate provisions are those provisions which appear to be “form” provisions that are typical in most contracts.  Oftentimes boilerplate provisions are found at the end of the project.

If you’d like to learn more about boilerplate provisions, you should read this short article discussing terms that should be in every contract.

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12. Breach of Contract

“To recover for breach of contract [in Missouri], a plaintiff must plead the following elements: (1) the existence of an enforceable contract between the parties to the action; (2) mutual obligations arising under its terms; (3) the party being sued failed to perform obligations imposed by the contract; and (4) the party seeking recovery was thereby damaged.” Jackson v. Williams, Robinson, White & Rigler, P.C., 230 S.W.3d 345, 348 (Mo. Ct. App. 2007) (citing Superior Ins. Co. v. Universal Underwriters Ins. Co., 62 S.W.3d 110, 118 (Mo.App. S.D.2001)).

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13. Certificate of Inspection

In the vast majority of municipalities in St. Louis, Missouri a certificate of inspection must be obtained prior to occupying or renting a structure.

The St. Louis municipal code makes it an ordinance violation if a certificate of inspection is not obtained prior to occupying or renting:

“It shall be unlawful for any person, firm, partnership, corporation, or any other legal entity to occupy or permit the occupancy for any purpose or collect the rent of any occupied dwelling unit when a complete change of occupancy has occurred without first securing a Certificate of Inspection for said dwelling unit.”

Who is responsible for obtaining the certificate of inspection in St. Louis City?

“It is the responsibility of the owner or grantee to secure a Certificate of Inspection. It shall be the responsibility of the owner or the owner’s agent and/or the tenant to provide access to all applicable areas subject to inspections as provided in this chapter.”

St. Louis City Municipal Code – 25.56.040 – Certificate of Inspection requirements.

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14. Certificate of Occupancy

A certificate of occupancy is issued by a building inspector when the structure satisfies the necessary code requirements for the locality. The certificate of occupancy is typically required prior to allowing individuals to legally reside or utilize such structure.

In Creve Coeur, Missouri, there are a number of requirements prior to obtaining a temporary certificate of occupancy. The City of Creve Coeur as well as the fire department are required to issue the partial certificate of occupancy, requiring the following to be satisfied:

  • St. Louis County mechanical, electrical, plumbing and heath inspections or specific approval of each of these inspectors to allow temporary occupancy
  • Emergency egress lights and exit signs
  • Emergency operation of elevators
  • Egress doors on hold open devices
  • Egress doors utilizing special locking arrangements and/or access-control devices
  • Any atrium smoke-control or removal system
  • Fire protective signaling system
  • Smoke and HVAC detectors
  • Fire sprinkler system
  • Any other fire suppression system
  • All fire resistance rated fire separation assemblies
  • All components comprising of means of egress
  • All other building construction per all building permits
  • Emergency generators

The above requirements are merely the requirements necessary to qualify for a temporary in certificate of occupancy in the Creve Coeur area. Each municipality has its own requirements to qualify for such certificate.

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15. Certificate of Substantial Completion

A certificate of substantial completion is a certificate issued by the architect designating the project as substantially complete. Substantial completion can assume a wide array of meanings depending on the contractual language and the nature of the project being performed.

However, the typically accepted, case law definition of substantial completion in Missouri is the following:

“[A] building is substantially complete so as to entitle the contractor to the full contract price when it has reached the state of its construction so that it can be put to the use for which it was intended.” L.L. Lewis Const., L.L.C. v. Adrian, 142 S.W.3d 255, 260 (Mo. Ct. App. 2004).

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16. Code of Federal Regulations (CFR)

The Code of Federal Regulations often assists in fleshing out the specifics of many federal statutes as well as its own standalone rules.

The Code of Federal Regulations are divided into 50 general titles which are each broad categories. Each of these broad categories are updated once a year on a staggered basis.

A number of OSHA regulations are set forth in the Code of Federal Regulations. Additionally, the Code of Federal Regulations has a vast number of regulations governing the Housing and Urban Development as well as the construction of manufactured homes and the safety standards related thereto.

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17. Code of State Regulations (CSR)

The Missouri Code of State Regulations contain a number of regulations that articulate many Missouri statutes and establish a framework of rules to assist in the administration of various matters within the state.

One specific example of a regulation that is commonplace in many government funded construction projects is Division 30 of the Rule of the Office of Administration. Chapter 5 of said Division creates Minority Business Enterprises (MBEs) and Women Business Enterprises (WBEs). Various governmental funding programs use tax credits and other incentives to promote the use of MBEs and WBEs on publicly funded projects.

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18. Change Order

A change order is a modification to the contract. Typically a change order is written and signed by the owner and architect (if an architect is on the project).  However, in Missouri, an oral change order is typically enforceable so long as the contractor and owner have mutually agreed upon the terms.  In the event that they did not, then the contractor may still have recourse by virtue of its equitable remedies such as quantum meruit and unjust enrichment.

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19. Clean Air Act

The Clean Air Act regulates air emissions and is set forth under

42 U.S.C. §7401 et seq. “The Clean Air Act (the Act) was enacted by the United States Congress on December 17, 1963. With the Clean Air Amendments of 1970, Congress enacted a comprehensive national program that made the federal government partners with the states in the fight against air pollution, requiring the Environmental Protection Agency (the EPA) Administrator to promulgate national ambient air quality standards (NAAQS) for certain pollutants.” Friends of Agric. for Reform of Missouri Envtl. Regulations v. Zimmerman, 51 S.W.3d 64, 66 (Mo. Ct. App. 2001)(citing General Motors Corp. v. U.S., 496 U.S. 530, 532–33, 110 S.Ct. 2528, 2530, 110 L.Ed.2d 480 (1990)).

Generally, the Federal Clean Air Act preempts the Missouri air conservation commission from enacting laws that have already been covered by U.S. Congress in the Federal Clean Air Act. “The Commission continues to have rulemaking authority to regulate Missouri air quality in all ways, and in all areas, not covered by the federal Clean Air Act.” Friends of Agric. for Reform of Missouri Envtl. Regulations v. Zimmerman, 51 S.W.3d 64, 80 (Mo. Ct. App. 2001).

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20. Clean Water Act

The Clean Water Act regulates the discharge of contaminants and pollutants into stormwater and wastewater systems in the United States. The Clean Water Act is set forth under 33 U.S.C.A. §§ 1251 et seq. (1981).

Missouri has its own parallel law called the Missouri Clean Water Law, which is set forth under R.S.Mo. § 644.006 et seq.

The policy of the Missouri Clean Water Act is set forth under R.S.Mo. § 644.011 and states the following, in pertinent part:

“it is hereby declared to be the public policy of this state to conserve the waters of the state and to protect, maintain, and improve the quality thereof for public water supplies and for domestic, agricultural, industrial, recreational and other legitimate beneficial uses and for the propagation of wildlife, fish and aquatic life; to provide that no waste be discharged into any waters of the state without first receiving the necessary treatment or other corrective action to protect the legitimate beneficial uses of such waters and meet the requirements of the Federal Water Pollution Control Act…” R.S.Mo. § 644.011

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21. Commercial General Liability Insurance (CGL)

Commercial General Liability Insurance is a type of insurance that typically covers bodily injury and damage caused to property. The Missouri Court of Appeals describes the intent of Commercial General Liability Insurance policies: “to protect against the unpredictable and potentially unlimited liability that can result from accidentally causing injury to other persons or their property.” Am. States Ins. Co. v. Mathis, 974 S.W.2d 647, 649 (Mo. Ct. App. 1998)(citing Columbia Mut. Ins. Co. v. Schauf, 967 S.W.2d 74, 78 (Mo. banc 1998)).

The Court of Appeals goes further to make a distinction, indicating what commercial general liability insurance policies are not:

A commercial general liability policy is not intended to protect business owners against every risk of operating a business. Columbia Mut. Ins. Co. v. Schauf, 967 S.W.2d 74, 78 (Mo. banc 1998)).

“Business risks are those risks that are the ‘normal, frequent, or predictable consequences of doing business, and which business management can and should control and manage.’ ” Columbia Mut. Ins. Co. v. Schauf, 967 S.W.2d 74, 78 (Mo. banc 1998)(quoting James T. Hendrick & James P. Wiezel, The New Commercial General Liability Forms—An Introduction and Critique, 36 F ed’n Ins. & Corp. Couns. Q. 319, 322 (Summer 1986)).

“It is not the function of the CGL policy to guarantee the technical competence and integrity of business management. The CGL policy does not serve as a performance bond, nor does it serve as a warranty of goods or services. It does not ordinarily contemplate coverage for losses which are a normal, frequent or predictable consequence of the business operations. Nor does it contemplate ordinary business expense, or injury and damage to others which results by intent or indifference.” Hendrick & Wiezel, supra, at 322 n. 6 (quoting George H. Tinker, Comprehensive General Liability Insurance—Perspective and Overview, 25 Fed. Ins. Couns. Q. 217, 224 ((Spring 1975)). Am. States Ins. Co. v. Mathis, 974 S.W.2d 647, 649 (Mo. Ct. App. 1998).

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22. Completed Operations Liability Insurance

Completed Operations Liability insurance is a type of insurance coverage for an employer or construction company that protects said entity from liability that arises out of injury or damage that occurs after the operations are completed. Typically operations are considered “completed” under completed operations liability insurance policies once the employer or construction company completes the work in accordance with that set out in the contract.

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23. Completion Bond

In Missouri a completion bond is used interchangeably with a performance bond. A performance bond is often required on construction projects to ensure the completion of the performance of the contractors.

For example, if a subcontractor hired by the general contractor goes bankrupt, the general contractor can call on the surety who issued the performance bond to pay for the new subcontractor to come in and complete the work.

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24. Contract

A contract is typically composed of an exchange of promises between parties which is supported by legal consideration. A contract usually contains a promise, offer, and acceptance. Consideration is sometimes referred to as a bargained-for exchange.

Contracts in Missouri are enforceable whether they are oral or written.

However, it is always good practice to reduce the terms of an agreement to writing. It helps to avoid future confusion and reflects the true terms of the contract.

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25. Corporation

A corporation is an entity that is created pursuant to statute that is recognized as a legal entity. Corporations are governed by Chapter 351 of the Missouri Revised Statutes. Corporations differ from limited liability companies in that corporations (when referring to c-corporations) are double-taxed.  Corporations usually act as a shell or veil for the shareholders and officers unless certain acts are employed which would be ultra vires (acts outside the scope of the authority granted to agents of the corporation).

In Missouri, a corporation is treated as a separate legal entity from the shareholders who make up the ownership of the corporation. Thus, a corporation’s actions will not typically subject the shareholders to civil liability unless those actions are criminal or ultra vires, as noted above.

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26. Cost Proposal

A cost proposal is a document that is submitted by a contractor or subcontractor to the owner or general contractor for approval or denial of a certain scope of work on the project.  The cost proposal contains the projected costs that the subcontractor or contractor is requesting for that portion of the work.

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27. Critical Path Method (CPM)

The United States Court of Claims defined the critical path method as:

Essentially, the critical path method is an efficient way of organizing and scheduling a complex project which consists of numerous interrelated separate small projects. Each subproject is identified and classified as to the duration and precedence of the work. (E.g., one could not carpet an area until the flooring is down and the flooring cannot be completed until the underlying electrical and telephone conduits are installed.) The data is then analyzed, usually by computer, to determine the most efficient schedule for the entire project. Many subprojects may be performed at any time within a given period without any effect on the completion of the entire project. However, some items of work are given no leeway and must be performed on schedule; otherwise, the entire project will be delayed. These latter items of work are on the “critical path.” A delay, or acceleration, of work along the critical path will affect the entire project.

Haney v. United States, 676 F.2d 584, 595 (Ct. Cl. 1982).

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28. Davis-Bacon Act

The Davis-Bacon Act is a federal law that governs construction projects that are federally funded or assisted and requires the local prevailing wage to be paid to the workers on the project.

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29. Design/Build Contract

A design/build contract is a contract where the owner hires a general contractor to provide a team of workers to carry out the entirety of the project. In order to carry out these projects, the general contractors are responsible for providing engineers, architects, and other construction professionals to carry out the various tasks required on the project.

In Missouri, pursuant to the Metropolitan sewer district statute, R.S.Mo. § 249.425, a design-build contract is defined as: “a contract between a sewer district and a designbuild contractor to furnish the architecture, engineering, and related design services, and the labor, materials, and other construction services required for a specific construction project.” . R.S.Mo. § 249.425 (2011).

Pursuant to R.S.Mo. § 67.5070, wastewater or water treatment projects, a design-build contract is defined as “any contract that furnishes architecture or engineering services and construction services either directly or through subcontracts.” R.S.Mo. § 67.5070 (2016).

Under Missouri Statutes, Chapter 327, Architects, Engineers, Land Surveyors and Landscape Architects, a design-build contract is defined as “a contract between the owner, owner’s agent, tenant, or other party and a design-build contractor to furnish the architecture, engineering, and related design services, and the labor, materials, and other construction services required for a specific public or private construction project.” R.S.Mo. § 327.465 (2002).

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St. Louis Business Litigation Lawyer

Business and Commercial Litigation

Litigating a business dispute can often get messy.

In many instances businesses or commercial entities litigate over disputes or issues that often arise from the obligations or duties set forth in the contract between the parties.

These contracts often involve a lot of money, and in many cases a number of parties could be involved, especially when the transaction involves commercial entities.

We have sorted through some incredibly complex cases, and our attorneys know the procedure and the caveats of trying commercial litigation cases.

Our litigation attorneys represent a number of participants in the commercial context, including:

  • borrowers,
  • lenders,
  • suppliers,
  • vendors,
  • purchasers
  • collection agencies,
  • other law firms,
  • manufacturers,
  • limited liability companies,
  • distributors,
  • corporations
  • other commercial entities.

Success in Litigation Comes from Preparation

So how do our attorneys obtain a successful outcome for our clients?

While the outcome of a case can never be guaranteed, we understand the importance of preparing for trial and the advantages of using every tool at our disposal.

Long before the jury is called in, lawyers are battling intensely in the trenches.  This includes discovery strategy, motion work, and any other litigation tactics you can implement into the case.

The attorney who prepares the most and dominates the discovery and motion phases of the case lays the groundwork for success at trial.

Success in the motion phase of the litigation gives the attorney and his client the opportunity to better proceed with their case because they will be able to introduce evidence without a problem or even win the case summarily in some instances.

Regardless, the discovery phase and motion work allow the attorneys to create leverage for their client or require the opposing side to produce evidence or admissions that can change the posture of the case.

Discovery documents and information are used as evidence. 

The important and relevant information (and documentation) obtained during the discovery phase of the litigation is used at the trial.

Without conducting discovery, the parties may be left with some unwanted surprises at trial.  For that reason, it is important to leave no stone unturned by thoroughly propounding discovery on the opposing party.

Motion Practice

Motions give the attorney the ability to limit the other side’s ability to present evidence or to limit the issues the opposition plans to argue.

There are thousands of types of motions that can be filed throughout the course of a case. A good attorney will learn the background and preferences of the judge to determine whether a motion is worth filing and whether that motion will be fruitful.

In circumstances where the motion will merely annoy the judge or will not accomplish any real objective, the attorney is best advised to refrain from preparing and filing such a motion—for several reasons, it saves the client money, and the attorney does not go into the courtroom to argue a losing motion.

Some lawyers have the philosophy that if you lose one motion, you are now associated as a loser in the eyes of the judge.

Those same attorneys believe you should only proceed with a motion if you believe there is a high probability for success. Otherwise, you are setting yourself up for failure in several other aspects of your case.


There are obvious advantages that accompany a knowledgeable and well-prepared attorney. As discussed above, adequate preparation and an aggressive, thought-out pre-trial strategy can be critical to the client’s success.

Our attorneys know how to prepare, and we’ll be intimately familiar with the facts and legal issues surrounding your case, and we’ll employ vigorous litigation techniques to defend the rights of your business.

If you have a dispute that arises out of a commercial transaction, and you need legal assistance, our attorneys are more than happy to advise or litigate, whatever the situation necessitates.

Please contact us today to discuss how to proceed.

Missouri Mechanic’s Liens: Determining the Last Day Work was Performed

A mechanic’s lien must be filed within the time prescribed by statute, or it will not be valid.

So, how long does a contractor performing work in Missouri have to file a mechanic’s lien?

R.S.Mo. § 429.080 governs the time in which a mechanic lien must be filed and states, in pertinent part, that it must be filed: “[w]ithin six months after the indebtedness shall have accrued …” R.S.Mo. § 429.080 (2014) (emphasis added).

Thus, the next logical question is, when does the indebtedness accrue?

“The date the ‘indebtedness has accrue[s’] is the last day work was performed…When a job is finished and indebtedness has accrued is a question of fact.” Midwest Floor Co. v. Miceli Dev. Co., 304 S.W.3d at 247.

When is Work Lienable?

It is important to recognize the rigidity of the deadline as a contractor could be precluded from filing a mechanic’s lien if it is not timely filed.  The right and power to file a mechanic’s lien is created by statute, and thus the “lien claimant must substantially comply with statutory requirements.Midwest Floor Co. v. Miceli Dev. Co., 304 S.W.3d 243, 246 (Mo. Ct. App. 2009.

Accordingly, a contractor should know exactly what Missouri uses as the last day that work is performed. “If labor is performed after it is accepted as substantially complete under the contract, the work will not be lienable. See S & R, 610 S.W.2d at 694 (holding that if labor is done after the owner accepts the work as substantially complete under the contract, the work will not be lienable).” Brown v. Davis, 249 S.W. 696, 698 (Mo.App.St.L.1923).

“A subcontractor cannot, after the termination of an account, extend the mechanic’s lien filing time by rectifying some fault of his in performing the contract.” S & R Builders & Suppliers, Inc. v. Marler, 610 S.W.2d 690, 693 (Mo. Ct. App. 1980).

Last Day Work was Performed Case Summaries

The following is directly quoted from Manning Const. Co. v. MCI Partners, LLC, 419 S.W.3d 134, 139 (Mo. Ct. App. 2013) regarding that last day work is performed and is organized to facilitate legibility:

  • See, e.g., United Petroleum, 218 S.W.3d at 482 (“work performed by a subcontractor that is not intended to simply extend the mechanic’s lien account filing time but is necessary to complete the project in a workmanlike manner operates to extend the lien deadline if it is reasonably within the purview of the original contract” (emphasis added));
  • E. Birk & Son Plumbing & Heating, Inc. v. Malan Constr. Co., 548 S.W.2d 611, 616 (Mo.App.1977) (finding that later work extended lien-filing deadline where “[i]t cannot be denied that this work was essential for the completion of the project, and was not performed for the mere purpose of preserving a mechanic’s lien, but, rather, was reasonably within the purview of the original contract”);
  • Brown v. Davis, 249 S.W. 696, 697–98 (Mo.App.1923) (“It could not be said as a matter of law that the plaintiff performed the [later] work … merely for the purpose of extending the time for filing his lien …”);
  • Badger Lumber Co. v. W.F. Lyons Ice & Power Co., 174 Mo.App. 414, 160 S.W. 49, 53 (1913) (affirming trial court’s holding that later supply of materials to construction project extended deadline for lien filing as to earlier-supplied materials, where “the court, in its findings of fact, states that these items were not charged to the account by appellant for the purpose of extending the time for filing its lien, but were sold in good faith for the purpose of being used, and the same were used, in the construction of the building in question”);
  • Fire Extinguisher, 65 S.W. at 323 (noting evidence that “the [later] work done by the plaintiff … was not a mere scheme on its part to extend the period for filing the lien,” and that owner’s knowledge of, and acquiescence in, later work was “not [intended] as making a new contract for extending the period of limitations”);
  • see also School Dist. of Univ. City ex rel. H & M Mech. Corp. v. Reliance Ins. Co., 904 S.W.2d 253, 256 (Mo.App.E.D.1995) (applying mechanic’s-lien principles to suit on construction performance bond; “Where the reason for the furnishing of small additional items is only to circumvent the notice provision, the time for filing will not be extended.”).

Manning Const. Co. v. MCI Partners, LLC, 419 S.W.3d 134, 139 (Mo. Ct. App. 2013).

Can a Tenant Subject a Landlord’s Property to a Mechanic’s Lien in Missouri?

In the late 70’s and 80’s, there were a number of cases that came down addressing and analyzing a situation where tenants entered into a contract for improvements to the real property and subjected, or almost subjected (depending on how the court ruled), the landlord’s property to a mechanic’s lien.

The analysis at that time hinged greatly upon whether an agency relationship existed and whether the landlord bestowed sufficient authority upon the tenant for the tenant to be able to subject the property to a mechanic’s lien.

Several cases articulated various principles, essentially holding that such a determination required more than just a landlord-tenant relationship:

“[t]he fundamental principle is that the ‘mere relation(ship) of landlord and tenant does not in itself create an agency in the tenant within the meaning of the statutes covering mechanic’s liens.’” Paul A. Medley, Inc. v. Money Town, Inc., 581 S.W.2d 46, 49 (Mo. Ct. App. 1979)(quoting Sol Abrahams & Son Const. Co. v. Osterholm, 136 S.W.2d 86, 92 (Mo.App.1940); Ward v. Nolde, 259 Mo. 285, 168 S.W. 596, 600 (1914); McGuinn v. Federated Mines and Milling Co., 160 Mo.App. 28, 141 S.W. 467, 468 (1911)).

“A corollary principle is that the mere fact that the landlord or lessor consented to the lessee’s making of alterations for the Lessee’s convenience does not create an agency for purposes of the lien.” Paul A. Medley, Inc. v. Money Town, Inc., 581 S.W.2d at 49 (citing Ward v. Nolde, 259 Mo. 285, 168 S.W. 596, 600 (1914); Curtin-Clark Hardware Co. v. Churchill, 126 Mo.App. 462, 104 S.W. 476, 477 (1907); Winslow Bros. Co. v. McCully Stone Mason Co., 169 Mo. 236, 69 S.W. 304, 305 (1902)).

The cases point to the importance of the contractual language between the landlord and the tenant.  “For an agency to exist that would allow the tenant to encumber the interest of the landlord in the property, a right ‘must spring from (the) contract, express or implied, between the tenant and landlord.’” Paul A. Medley, Inc. v. Money Town, Inc., 581 S.W.2d at 49 (citing Powell v. Reidinger, 234 S.W. 850, 852 (Mo.App.1921)).

However, in order for a contractor to have a lien, the Court of Appeals, in the Paul A. Medley case held that the landlord must have some intent in requiring that the tenant make some alterations which amount to a “permanent and substantial benefit to the leasehold.” Id.

“In Messina,…the court summarized certain principles that have developed in determining whether a lessee is the agent of the lessor so as to impress the lessor’s interest with a lien. Those principles are as follows:

(a) mere relationship of lessor lessee does not create agency;

(b) at the time of the execution of the lease the lessee must be obligated to make the changes or improvements;

(c) the improvements must be of substantial and permanent benefit to the leasehold;

(d) mere consent by lessor allowing change or improvements is insufficient; and

(e) in ascertaining the requisite intent, both the lease instrument and the whole of the circumstances may be considered.” Bates v. McKay, 724 S.W.2d 565, 571 (Mo. Ct. App. 1986)(citing Messina Brothers Construction Co. v. Williford,630 S.W.2d 201, 210 (Mo.App.1982)).

“In determining whether the improvements were of permanent and substantial benefit to the leasehold, it is appropriate to consider the improvement in question in relation to the size of the building, whether the improvements substantially altered the character of the premises, and the value to the lessor.” Bates v. McKay, 724 S.W.2d 565, 572 (Mo. Ct. App. 1986)

(citing Paul A. Medley, Inc. v. Money Town, Inc., 581 S.W.2d 46, 49 (Mo.App.1979)).

These factors are important because they weigh the interests of the general contractor and the owner of the property in an attempt to arrive at the most equitable outcome. The underlying principle is that Missouri courts seek to determine whether the burden of payment (or loss of payment) should fall on the owner or general contractor in an effort to reduce or prevent any unjust enrichment to the parties involved.

Conclusion Regarding Tenant’s Ability to Subject a Landlord’s Property to a Mechanic’s Lien in Missouri

The answer to whether a tenant can subject a landlord’s property to a mechanic’s lien is very fact intensive.  As explained above, there are a number of factors that are weighed before a court will make a determination regarding whether the tenant was deemed an agent for purposes of subjecting the landlord’s property to a valid mechanic’s lien. If you find yourself in a similar situation involving the filing or necessary removal of a mechanic’s lien, please contact one of our experienced attorneys to advise you of your rights.

Elements of the Missouri Merchandising Practices Act

Elements of the Missouri Merchandising Practices Act

Definitions of Unlawful Acts under the Missouri Merchandising Practices Act

Definitions of Unlawful Acts under the Missouri Merchandising Practices Act

Unlawful Act or Practice




“Deception is any method, act, use, practice, advertisement or solicitation that has the tendency or capacity to mislead, deceive or cheat, or that tends to create a false impression.–Reliance, actual deception, knowledge of deception, intent to mislead or deceive, or any other culpable mental state such as recklessness or negligence, are not elements of deception” 15 CSR 60-9.020


“It is a misrepresentation for any person in connection with the advertisement or sale of merchandise to make any fraudulent assertion. — An assertion is fraudulent if the person intends his/her assertions to induce a consumer to purchase merchandise, and the person: (A) Knows or believes that the assertion is not in accord with the facts; or (B) Knows that he does not have a reasonable basis for his/her assertion” 15 CSR 60-9.100

False and Misleading Statements

“A seller shall not make a representation or statement of fact in an advertisement that is false or has the capacity to mislead prospective purchasers.” 15 CSR 60-7.020

False Pretense

“False pretense is any use of trick or deception, forgery, or false and fraudulent representation, statement, pretense, instrument or device with the intent to defraud–Reliance and injury are not elements of false pretense” 15 CSR 60-9.050

False Promise

“False promise is any statement or representation which is false or misleading as to the makerís intention or ability to perform a promise, or likelihood the promise will be performed.” 15 CSR 60-9.060


“It is a misrepresentation for any person in connection with the advertisement or sale of merchandise to omit to state a material fact necessary in order to make statements made, in light of the circumstances under which they are made, not misleading.” 15 CSR 60-9.090


“A misrepresentation is an assertion that is
not in accord with the facts”
15 CSR 60-9.070; see Restatement,
Second, Contracts, section 159; Packard v. K
C One, Inc.
, 727 SW2d 435 (Mo.App.,
W.D. 1987).

Unfair Practice

“An unfair practice is any practice which—
(A) Either—1. Offends any public policy as it has been established by the Constitution, statutes or common law of this state, or by the Federal Trade Commission, or its interpretive decisions; or 2. Is unethical, oppressive or unscrupulous; and
(B) Presents a risk of, or causes, substantial
injury to consumers–Proof of deception, fraud, or misrepresentation is not required to prove unfair practices”
15 CSR 60-8.020

Concealment of Material Fact

“Concealment of a material fact is any method, act, use or practice which operates to hide or keep material facts from consumers.” 15 CSR 60-9.110 (1)

Suppression of Material Fact

“Suppression of a material fact is any method, act, use or practice which is likely to curtail or reduce the ability of consumers to take notice of material facts which are stated.” 15 CSR 60-9.110 (2)

Omission of Material Fact

“A seller shall not omit any material fact in an advertisement.” — “[A]ny failure by a person to disclose material facts known to him/her, or upon reasonable inquiry would be known to him/her.” 15 CSR 60-7.030; 15 CSR 60-9.110 (3)


Missouri Mechanic’s Lien Requirements [Infographic]

MO Mechanics Lien Requirements Infographic


  • Must be filed within six months after the indebtedness accrues
  • Indebtedness accrues on the last day work is performed
  • “A subcontractor cannot, after the termination of an account, extend the mechanic’s lien filing time by rectifying some fault of his in performing the contract.” S & R Builders & Suppliers, Inc. v. Marler, 610 S.W.2d 690, 693 (Mo. Ct. App. 1980).

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1. General Contractor



2. Subcontractor

A. Residential Owner Occupied Property of 4 Units or Less

  • Consent to Mechanic’s Lien must be in 10 point bold font signed writing, stating:



B. Other Real Property: 10 day Notice of Intent to File Mechanic’s Lien Statement

“Every person except the original contractor, who may wish to avail himself of the benefit of the provisions of sections 429.010to 429.340, shall give ten days’ notice before the filing of the lien, as herein required, to the owner, owners or agent, or either of them, that he holds a claim against such building or improvement, setting forth the amount and from whom the same is due.” ~ R.S.Mo. § 429.100

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 (a) a just and true account of the demand;

-inaccuracies are unintentional and are the result of honest inadvertence, accident, or oversight, and do not result from deliberate intention or design;

-inclusion of a nonlienable item is the result of honest mistake or inadvertence without intent to defraud and if the nonlienable items can be separated from the lienable items

-no rigid definition of just and true– depends on the facts of each particular case

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General Contractors

“if [] lien statement simply states his account in a lump sum, without itemization.’ Commercial Openings, Inc. v. Mathews, 819 S.W.2d 347, 349–50 (Mo. 1991)(internal citations omitted).


must  have “an itemized statement of the labor and materials furnished.’” Commercial Openings, Inc. v. Mathews, 819 S.W.2d 347, 349–50 (Mo. 1991)(internal citations omitted).

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(b) a true description of the property, or so near as to identify the same;

  • “need not be letter perfect…” Breckenridge Material Co. v. Byrnesville Const. Co., 842 S.W.2d 551, 552 (Mo. Ct. App. 1992).
  • only be sufficient to enable one familiar with the locality to identify the premises intended to be covered by the lien.” Breckenridge Material Co. v. Byrnesville Const. Co., 842 S.W.2d 551, 552 (Mo. Ct. App. 1992).

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(c) the name of the owner or contractor, or both if known to the person filing the lien; and

(d) verification by the oath of himself or some credible person for him

  • Must be Notarized ~ S.Mo. § 429.080

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If used in improving the property:

  • lumber
  • paneling
  • sheet rock
  • tape
  • paint
  • paint brushes
  • sandpaper
  • saw blades

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  • An action to foreclose a mechanic’s lien must be commenced within 6 months of filing the lien ~ S.Mo. § 429.170

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Illinois Construction Law FAQs

General Construction Law Questions

What is the required compliance with Illinois Contracts for the Construction of Buildings? Substantial or Strict Compliance?

Illinois Courts have held that: “persons contracting for the construction and erection of monuments to perpetuate the memory and mark the resting place of their dead are entitled to insist upon a strict compliance with the specifications as to design and character of workmanship.” Oakes v. Barbre, 127 Ill. App. 208, 210 (Ill. App. Ct. 1906)

However, contracts for the construction of a building typically only require substantial compliance.  See generally Oakes v. Barbre, 127 Ill. App. 208, 210 (Ill. App. Ct. 1906); Fitzgerald v. Neville, 210 Ill. App. 659, 659 (Ill. App. Ct. 1918).

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Can a General Contractor bind a Subcontractor to perform the Work at the Bid Price?

Yes if the general contractor relies on the subcontractor’s bid, then the general contractor can estop the subcontractor from backing out of such bid on the basis of promissory estoppel.  Illinois Valley Asphalt, Inc. v. J.F. Edward Construction Co., 413 N.E.2d 209 (3d Dist. 1980).

“The elements of promissory estoppel [in Illinois] are: (1) a promise unambiguous in terms; (2) reliance on such promise by the party to whom it is made; (3) this reliance is expected and foreseeable by the party making the promise; and (4) the one to whom the promise is made must rely on the promise to his injury.” Illinois Valley Asphalt, Inc. v. J. F. Edwards Const. Co., 90 Ill. App. 3d 768, 770, 413 N.E.2d 209, 211 (1980).

Another way of defining the elements of promissory estoppel is the following: “a plaintiff must show (1) that the defendant made a promise unambiguous in its terms, (2) that the plaintiff relied on the promise, (3) that this reliance was expected and foreseeable from the defendant’s position, and (4) that the plaintiff’s reliance on the promise was detrimental.” Pickus Const. & Equip. v. Am. Overhead Door, 326 Ill. App. 3d 518, 523, 761 N.E.2d 356, 361 (2001).

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What does a Contractor have to Prove to be entitled to Additional Compensation on a Construction Project?

“[A] contractor must prove the following elements by clear and convincing evidence to recover additional compensation for extra work on a construction contract: (1) the work was outside the scope of the construction contract; (2) the extra items were ordered by the owner; (3) the owner agreed to pay extra, either by his words or conduct; (4) the extras were not furnished by the contractor as his voluntary act; and (5) the extra items were not rendered necessary by any fault of the contractor.” 209 N. Walnut, L.L.C. v. Origin Fire Prot., Inc., 2013 IL App (2d) 120831-U, ¶ 29(citing A.W. Wendell & Sons, Inc. v. Qazi, 254 Ill.App.3d 97, 104 (1993)).

“The contractor sustains this burden by proving that the extra work was requested by the owner, and there is no evidence indicating that the work was necessary or voluntarily performed due to fault by the contractor.” 209 N. Walnut, L.L.C. v. Origin Fire Prot., Inc., 2013 IL App (2d) 120831-U, ¶ 29(citing A.W. Wendell & Sons, Inc. v. Qazi, 254 Ill.App.3d 97, 104 (1993)).

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What is a Pay-If-Paid Clause in Illinois Construction Law?

“[A] pay-if-paid clause, as the name suggests, provides that a subcontractor will be paid only if the contractor is paid and thus ensures that each contracting party bears the risk of loss only for its own work. A typical clause of this type might say: ‘Contractor’s receipt of payment from the owner is a condition precedent to contractor’s obligation to make payment to the subcontractor; the subcontractor expressly assumes the risk of the owner’s nonpayment and the subcontract price includes the risk.’” Beal Bank Nevada v. Northshore Ctr. THC, LLC, 2016 IL App (1st) 151697, ¶ 24, 64 N.E.3d 201, 209, appeal denied sub nom. Beal Bank Nevada v. FCL Inv’rs, Inc., No. 121523, 2017 WL 598624 (Ill. Jan. 25, 2017).

What is a Pay-When-Paid Clause in Illinois Construction Law?

“A pay-when-paid clause governs the timing of a contractor’s payment obligation to the subcontractor, usually by indicating that the subcontractor will be paid within some fixed time period after the contractor itself is paid by the property owner.” Beal Bank Nevada v. Northshore Ctr. THC, LLC, 2016 IL App (1st) 151697, ¶ 24, 64 N.E.3d 201, 209, appeal denied sub nom. Beal Bank Nevada v. FCL Inv’rs, Inc., No. 121523, 2017 WL 598624 (Ill. Jan. 25, 2017).

“A typical clause of this type might say: ‘Contractor shall pay subcontractor within seven days of contractor’s receipt of payment from the owner.’” Id. (citing Robert F. Carney & Adam Cizek, Payment Provisions in Construction Contracts and Construction Trust Fund Statutes, 24 CONSTRUCTION LAW, Fall 2004, at 5, 5.).

“These clauses address the timing of payment, not the obligation to pay. They do not excuse a contractor’s ultimate liability if it does not receive payment by the property owner, so they do not transfer the risk of ‘upstream’ insolvency from contractor to subcontractor and on down the chain.” Beal Bank Nevada v. Northshore Ctr. THC, LLC, 2016 IL App (1st) 151697, ¶ 24, 64 N.E.3d 201, 209, appeal denied sub nom. Beal Bank Nevada v. FCL Inv’rs, Inc., No. 121523, 2017 WL 598624 (Ill. Jan. 25, 2017).

Illinois Prompt Payment Act

What is the Illinois Prompt Payment Act?

The Illinois Contractor Prompt Payment Act states that if a contractor performs work in accordance with that required of him/it under the contract, and payment for the same is undisputed, the owner must pay said contractor within 15 days.

Contractors are required to pay subcontractors within 15 days as well.  The date the 15 days begins to run is the date that a pay application is completed, submitted, and accepted.  The Prompt Payment Act also allows the claimant to collect 10% interest.

If proper notice is provided (7 days written), the unpaid contractor may cease performance of work until payment is made by the obligated party.

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When did the Prompt Payment Act become part of Illinois law?

In 2007, the Illinois Contractor Prompt Payment Act, which was denominated House Bill 743, passed both houses and was sent to Rod Blagojevich, the governor at the time, for signature.  The Contractor Prompt Payment Act is officially set forth under 815 ILCS 603/1 et seq.

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Home Repair and Remodeling Act

What is the Home Repair and Remodeling Act?

The Home Repair and Remodeling Act is governed by (815 ILCS 513/1 through 999 (West 2006)).  “The Act requires that for any repair or remodeling work over $1,000, ‘a person engaged in the business of home repair or remodeling shall furnish to the customer for signature a written contract or work order.’” Behl v. Gingerich, 396 Ill. App. 3d 1078, 1085, 920 N.E.2d 665, 670 (2009) (citing 815 ILCS 513/15 (West 2006)).

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What are some of the Requirements for Individuals or Contractors governed by the Home Repair and Remodeling Act?

The policy behind the Home Repair and Remodeling Act is to protect customers from unfair or deceptive practices.  Thus, the Act demands that individuals or contractors performing repair or remodeling work in Illinois follow certain statutory requirements.

One of these requirements deals with the contract. The contract that is furnished to the customer must include certain disclosure requirements, such as the cost and contact information for the company performing the work as well as its address. See Behl v. Gingerich, 396 Ill. App. 3d 1078, 1085, 920 N.E.2d 665, 670 (2009); (815 ILCS 513/15 (West 2006)).

Construction companies or individuals performing work that is governed by the Act are also required to “provide to [] customers a copy of the ‘Home Repair: Know Your Consumer Rights’ pamphlet prior to the execution of any home repair and remodeling contract.” See Behl v. Gingerich, 396 Ill. App. 3d 1078, 1085, 920 N.E.2d 665, 670 (2009); (815 ILCS 513/20 (West 2006)).

In addition to providing a copy of the pamphlet, the Act makes it “unlawful for any person engaged in the business of home repairs and remodeling to remodel or make repairs before obtaining a signed contract or work order [when the amount of the work is] over $1,000.” Behl v. Gingerich, 396 Ill. App. 3d 1078, 1085, 920 N.E.2d 665, 670 (2009)(citing 815 ILCS 513/30 (West 2006)).

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What is the Purpose of the Home Repair and Remodeling Act?

The purpose of the Home Repair and Remodeling Act is “to improve communication between consumers and persons engaged in the business of home repairs or remodeling in order to ‘increase consumer confidence, reduce the likelihood of disputes, and promote fair and honest practices in [the repair and remodeling] business in this State.’” Behl v. Gingerich, 396 Ill. App. 3d 1078, 1085, 920 N.E.2d 665, 672 (2009) (Quoting 815 ILCS 513/5 (West 2006)).

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What happens if the Individual or Contractor fails to Substantially Comply with the Home Repair and Remodeling Act?

The contractor or individual could potentially forfeit their right to collect on the Project.  For example, in Smith v. Bogard, the Illinois Court of Appeals, of the Fourth District, “held that the contractor’s failure to provide a written contract or work order and the consumer-rights brochure prior to beginning construction defeated his legal and equitable claims for recovery.” Behl v. Gingerich, 396 Ill. App. 3d 1078, 1088, 920 N.E.2d 665, 673 (2009).

In other situations, however, the Illinois Court of Appeals has found that failure to substantially comply does not bar recovery.

The Illinois Court of Appeals for the First District did not follow the Smith decision and instead permitted the contractor to recover under a quantum meruit theory.

While the court held that the agreement was not enforceable because of the writing requirement,  “the court [also] concluded that the writing requirement of the Act did not foreclose an equitable theory of recovery between, in that particular case, an honest contractor and a ‘sophisticated’ consumer.” Behl v. Gingerich, 396 Ill. App. 3d 1078, 1089, 920 N.E.2d 665, 673 (2009)(citing K. Miller Construction, 394 Ill.App.3d at 250, 332 Ill.Dec. 857, 913 N.E.2d at 1149–50).

“[T]he Second District considered whether a contractor’s failure to provide the homeowners with the consumer-rights brochure in violation of section 20 of the Act (815 ILCS 513/20 (West 2006)) forfeited his legal and equitable causes of action.” Behl v. Gingerich, 396 Ill. App. 3d 1078, 1089, 920 N.E.2d 665, 673 (2009).

“The court concluded that a contractor’s failure to provide the brochure may provide a homeowner with a cause of action under the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 through 12 (West 2006)) but does not ‘vitiate the contractor’s right to recover either in equity or in law.’” Behl v. Gingerich, 396 Ill. App. 3d 1078, 1089, 920 N.E.2d 665, 674 (2009)(quoting Artisan Design, 397 Ill.App.3d at 328, 337 Ill.Dec. at 247, 922 N.E.2d at 370).

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Quantum Meruit

What is Quantum Meruit in the Illinois Construction Law Context?

Quantum meruit is a quasi-contract claim based on principles of equity (fairness).  When work is performed and Illinois courts deem that there was not a valid, legally binding contract, then out of principles of fairness, the courts will consider whether the person or entity performing the work should be entitled to payment.

The courts describe the conferring of a benefit on another, and whether an award is warranted: “‘[O]nly if the circumstances of its receipt or retention are such that, as between the two persons, it is unjust for him to retain it. The mere fact that a person benefits another is not of itself sufficient to require the other to make restitution therefor.’”  Housewright v. Vinyard, 2013 IL App (3d) 120666-U, ¶ 37 (quoting Rutledge v. Housing Authority of the City of East St. Louis, 88 Ill.App.3d 1064, 1069 (1980) (quoting Restatement of Restitution § 1, Comment c (1937))).

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How can Quantum Meruit be established on an Illinois Construction Project?

A party can establish a claim for quantum meruit through evidence of actual expenditures on labor, including time sheets and testimony, as to actual labor used and amounts paid for materials. BRL Carpenters, Ltd. v. American National Bank & Trust Co., 126 Ill.App.3d 137 (1984). However, “[p]roof of a bill for a particular amount, without more, is not evidence of the value of services rendered or materials furnished.” Keno & Sons Construction Co. v. La Salle National Bank, 214 Ill.App.3d 310, 312 (1991). Absent a detailed breakdown of costs, there is no way to determine the extent of recovery to which the claimant is entitled. Id. Housewright v. Vinyard, 2013 IL App (3d) 120666-U, ¶ 37.

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7 Provisions that Should be in Every Construction Contract

Have you ever read through a contract and afterwards wondered to yourself what you just read?

Contracts are often rife with boilerplate provisions that usually have little or no significance to the average person. The common response is that this is a bunch of legal jargon—that’s why I hired a lawyer.

The lawyer is supposed to take care of those things and interpret that language to make sure the other side isn’t pulling a fast one on me. Although many of these provisions are seemingly useless, some of them might have a significant impact if there is a dispute and the parties wind up in litigation.

For those individuals looking to better understand some of those alleged boilerplate provisions, we’ve put together a list of common contractual provisions, specifically geared towards assisting parties to construction contracts.

We’ve attempted to explain these provisions, including why they might be important and what each provision ultimately attempts to accomplish.

The following is a table of contents in the event that you would like to skip to a certain provision:

Force Majeure Clause (Act of God)

Force majeure is derived from the French language, meaning “superior force.” This typically refers to an event that is not typically anticipated and is not under the control of either party.  Sometimes these events are referred to as acts of God.  Although denominated “acts of God,” these acts include natural disasters like tsunamis, floods, hurricanes, and tornados, but they also can include human intervention such as strikes, riots, fires, wars, and the like.

A force majeure clause can often absolve the parties from their contractual obligations in the event that an Act of God occurs.  Accordingly, it is often wise to include the same in your contract to prevent an inequitable outcome.

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No Third Party Beneficiaries

A third party beneficiary is a person who is not a party to the contract at issue, but the contract will benefit said person either intentionally or incidentally.  A no third party beneficiary provision precludes any third parties from coming in and asserting rights in the contract and/or enforcing provisions against the parties named in the contract.

Typically the parties do not intend to benefit a third party and if they do, the parties they will expressly include such language in the contract.  The third party beneficiary is typically referred to as an intended third party beneficiary under such circumstances.  However, in certain situations, Missouri courts will find that an incidental third party beneficiary has certain rights that flow from the contract.

In order to avoid this unwanted outcome (or if it is wanted, then you should include an express provision in the contract), the attorneys drafting the contract should include a provision prohibiting the rights of any third party beneficiary.

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Liquidated Damages Clause

“Liquidated damages are a measure of compensation which, at the time of contracting, the parties agree shall represent damages in a case of breach.” Paragon Grp., Inc. v. Ampleman,878 S.W.2d 878, 880 (Mo. App. E.D. 1994).

A liquidated damages clause is particularly important in the construction industry and thus is found quite often in construction contracts.

However, in order for the liquidated damages clause to be enforceable, there are a number of different elements that must be satisfied.

To enforce a liquidated damages provision in Missouri, the claimant must first show some harm. “In Missouri, before triggering a liquidated damages provision, our courts have ‘consistently’ held that the party requesting enforcement of the liquidated damages provision ‘must show at least some actual harm or damage caused by the breach.’” Arcese v. Daniel Schmitt & Co. (Mo. App., 2016)(citing Grand Bissell Towers, Inc., 657 S.W.2d at 379; see also Phillips v. Mo. TLC, LLC, 468 S.W.3d 398, 400 (Mo. App. S.D. 2015) (“While it is not necessary to actually prove damages in the same amount as stated in a liquidated damages provision, we have reasoned that without evidence of damages, a liquidated damages clause actually becomes a penalty and is unenforceable.”) (internal citations and quotation marks omitted).

“Although proof of a precise dollar amount is unnecessary, ‘it nevertheless must be shown that some harm or damage, in fact, occurred.” Arcese v. Daniel Schmitt & Co. (Mo. App., 2016) (quoting Valentine’s, Inc. v. Ngo, 251 S.W.3d 352, 355 (Mo. App. S.D. 2008) (quoting Goldberg, 672 S.W.2d at 179).

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What is a Penalty Clause in the Liquidated Damages Context?

“[A] penalty [clause] is not a measure of compensation for contract breach, but rather, a punishment for default or a security for actual damages sustained due to non-performance which incorporates the idea of punishment.” Arcese v. Daniel Schmitt & Co. (Mo. App., 2016)(quoting Goldberg v. Charlie’s Chevrolet, Inc., 672 S.W.2d 177, 179 (Mo. App. E.D. 1984); see also Star Dev. Corp. v. Urgent Care Assocs., Inc., 429 S.W.3d 487, 491 (Mo. App. W.D. 2014).

“Ordinarily, ‘penalty clauses’ are disguised as liquidated damages clauses. The mere branding of a provision in a contract as one of ‘liquidated damages’ does not, however, make it so. If, in fact, said provision is a penalty, the labeling of the clause is of no consequence. Accordingly, the import of construing purported liquidated damages provisions cannot be overstated, in that, generally, liquidated damages clauses are valid and enforceable, whereas “penalty clauses” are invalid and unenforceable.” Arcese v. Daniel Schmitt & Co. (Mo. App., 2016)(internal citations omitted).

“In Missouri, we have adopted the rules of the Restatement of Contracts for determining whether a liquidated damages clause is in fact a penalty. See, e.g., Corrigan Company Mechanical Contractors v. Fleischer, 423 S.W.2d 209, 213-214 (Mo.App.1967).

These rules are: ‘(1) An agreement, made in advance of breach, fixing the damages therefor, is not enforceable as a contract and does not affect the damages recoverable for the breach, unless (a) the amount so fixed is a reasonable forecast of just compensation for the harm that is caused by the breach, and (b) the harm that is caused by the breach is one that is incapable or very difficult of accurate estimation.’ Restatement of Contracts § 339 (1932).” Grand Bissell Towers, Inc. v. Joan Gagnon Enterprises, Inc., 657 S.W.2d 378, 379 (Mo. App. E.D., 1983).

If the liquidated damages provision is not drafted properly, it will be subject to attack and may not hold up in court.  Accordingly, a well-versed attorney should draft any liquidated damages clause to ensure that it will withstand scrutiny if attacked by the opposing party. To the contrary, if you are defending a claim or offset based on liquidated damages, please contact one of our attorneys to learn about your legal rights.

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Counterparts (Facsimile Signing)

A counterpart signature provision is typically used as a convenience when the parties are not in the same physical location, oftentimes a counterpart facsimile provision specifically permits and validates the signing of the contract in counterparts that are faxed to the other party to the contract.

This provision may only provide a small benefit that may never matter for all practical purposes. However, if one of the parties puts the authenticity of the contract or signatures in question, the counterparts facsimile signing provision may serve as an additional safeguard to prevent any questions regarding the validity of the signatures.

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Interpretation & Headings of Contract

This clause basically states that the headings have no bearing on the content contained thereunder, and the contract should be interpreted based on the language in the body.

From a practical standpoint, most courts will not take into consideration the headings in determining the intent of the parties, as questions of ambiguity are resolved based on the parties’ meeting of the minds (their intent).  Thus, the headings should not matter when a court interprets the same.

However, if the opposing party is arguing that the heading’s title affects the interpretation, a court could adopt such argument and agree that the headings are also language in the contract.  Because the headings also are language in the contract, said language could have a bearing on the contract’s interpretation.

Thus, instead of leaving things to chance, the simple inclusion of an interpretation and headings of contract provision could prevent an improper interpretation of the terms contained in your agreement.

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Severance Provision

The severance provision usually looks something like this:

The provisions of this Agreement are severable. If any portion, provision, or part of this Agreement is found to be, determined, held, or adjudicated to be invalid, unenforceable, or void for any reason whatsoever, any such portion, provision or part shall be severed from the remaining portions, provisions or parts of this Agreement and shall not affect the validity or enforceability of any remaining portions, provisions, or parts.

As one may infer from the foregoing provision, the purpose of the severance provision is to ensure that the contract is not rendered null and void in its entirety due to one invalid or unenforceable provision.  Judges have tremendous power to interpret and make a determination regarding the terms and conditions of a contract.  If a judge decides that one provision is not enforceable, it should not wholly invalidate the contract.

For that reason, a severance provision should be included in every contract.

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Choice of Law or Forum Selection Clause

A choice of law provision designates the jurisdiction or the substantive law that governs the contract.  Also, using a forum selection clause the parties can choose the forum where the case will be resolved.  As a caveat, this provision may be superseded by a statute in certain limited circumstances such as when a consumer transaction is involved.

Consumer statutes, like the Fair Debt Collection Practices Act (“FDCPA”), protect the consumer from selecting a venue that will frustrate their ability to defend their rights in the event a dispute arises.  Accordingly, the statute makes the proper venue the county where the contract is consummated. Any deviation from this venue could be deemed a violation of the FDCPA. However, the case law defining such FDCPA violations is mixed and very gray.  Thus, you are always advised to consult with an experienced consumer protection attorney to determine whether your contract is safe with respect to the stringent FDCPA protections.

Any companies drafting a contract should choose the jurisdiction of their state law, which is Missouri for the vast majority of the readers of this article. Choosing the substantive law of your home state (or the state of your lawyer) would allow your company to have an upper hand because your lawyer should be well-apprised as to the substantive law of that particular state.  Further, if you choose the venue in which your lawyer is located, you will have another advantage as your lawyer will be familiar with the procedural process, and hopefully the judges, in such venue.

Accordingly, it is well-advised to include a jurisdiction and forum selection clause in every construction contract.

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Alternative Dispute Resolution Clause

This can be a lifesaver provision against a consumer.  Under alternative dispute resolution (“ADR”) or arbitration, the consumer waives their right to a jury usually, and in such a case, the risk and cost of the litigation is much less.  This gives the consumer much less leverage, especially in the construction context because a claim based on violations of the Missouri Merchandising Practices Act (“MMPA”) is probably in play.

When a consumer brings an MMPA claim the ante is raised because the MMPA (statute) allows the judge to award attorney’s fees in the event that the trier of fact finds that the contractor violated the MMPA.  Because a jury could rule in either party’s favor and because of the substantial risk involved, many contractors are forced into settling the matter, instead of the possible alternative of: betting the business on winning the litigation.

If the case proceeds through alternative dispute resolution, there are much less formalities and the rules of procedure (and rules of evidence) are limited to allow an expedited disposition of the case.  For that reason, ADR is often more economical and reduces certain ploys used by plaintiffs’ attorneys to create settlement leverage by capitalizing on the slow, and sometimes over formal, judicial process.

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Time is of the Essence

In a construction contract, a time is of the essence provision makes the completion of duties and the timing of the contractual obligations material to the laboring party’s performance. In the event the laboring party does not complete the performance, the party is in breach of contract or will be subject to liquidated damages (if such a clause is contained in the contract).

Because parties will often lose money if a project is not completed timely (due to lost business opportunities, lost profits from non-use of the facilities, etc.), the contract, especially in the construction industry, should include a time is of the essence provision.  For those parties who stand to potentially lose money because of a time is of the essence provision (general contractors and subcontractors), you may wish to negotiate such clauses out of the contract.  This must be addressed prior to execution of the contract.

In any event, these provisions can be critically important and can be very costly to the parties if they are inserted or deleted from the contract, depending on the factual scenario.

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Indemnity Provision

An indemnity provision is when one party in the contract agrees to pay for or answer for liability incurred by another.  It’s basically another way of saying that the party who is to indemnify is to reimburse the other for any expenses that are incurred (based on whatever the triggering event is).

Contractual indemnity is when the parties expressly agree to the same in the contract.  Equitable or non-contractual indemnity is when Missouri courts find that one party, based on principles of equity, ought to pay for the other party’s liability.

For contractual indemnity provisions, Missouri courts have “recognize[d] that indemnity contracts are of two kinds, those against loss and those against liability. Burns & McDonnell Engineering Co., Inc. v. Torson Const. Co., Inc., 834 S.W.2d 755 (Mo. App.W.D., 1992) (citing Superintendent of Ins. v. Livestock Mkt. Ins. Agency, Inc., 709 S.W.2d 897, 903 (Mo.App.1986)).

“In either case, the cause of action accrues when the covenant is breached.” Burns & McDonnell Engineering Co., Inc. v. Torson Const. Co., Inc., 834 S.W.2d 755 (Mo. App.W.D., 1992) (citing Superintendent of Ins. v. Livestock Mkt. Ins. Agency, Inc., 709 S.W.2d 897, 903 (Mo.App.1986)).

  • Indemnity against loss accrues when the indemnitee sustains actual loss.

This contemplates actual payment by the indemnitee for the obligation which the party has been found liable. Ruysser v. Smith, 293 S.W.2d 930, 933-34 (Mo.1956); Moberly v. Leonard, 339 Mo. 79199 S.W.2d 58, 63 (1936).

  • Indemnity against liability accrues as soon as liability occurs, and no actual loss need be shown.

Indemnity against liability “cannot accrue until an indemnitee’s liability has become ‘fixed and established.’” Burns & McDonnell Engineering Co., Inc., 834 S.W.2d at 758; see Moberly, 99 S.W.2d at 63.

The mere assertion of a claim against the indemnitee does not “fix and establish” liability, but only subjects the party to potential liability to be determined with the outcome of the lawsuit. Therefore, a cause of action for indemnity against liability cannot accrue until the claim against the indemnitee is completely resolved. Only then is the party’s liability “fixed and established.” Burns & McDonnell Engineering Co., Inc. v. Torson Const. Co., Inc., 834 S.W.2d 755 (Mo. App.W.D., 1992).

According to the foregoing Missouri law, the drafter of an indemnity contract or even a simple indemnification provision within a different contract should consider the objective of the parties, and for what specific situations they would like indemnification.

Some contracts are a combination and have clauses that indemnify against loss and liability. A more specific description of a clause that is intermixed as such is described and articulated in the Burns & McDonnell case:

“[T]he contract provides that Torson will indemnify and hold Burns harmless against all “‘damages, losses and expenses, including attorney’s fees.’” Id.

“This language contemplates indemnification for ‘loss.’ The contract also agrees to indemnify and hold Burns harmless against all “claims.” The use of the word ‘claims,’ while not expressly so designating, indemnifies Burns from any liability which it might incur.” Id.

“The word ‘liability’ is a broad legal term and includes ‘almost every character of hazard or responsibility, absolute, contingent or likely’; and the “condition of being actually or potentially subject to an obligation.” Black’s Law Dictionary 823 (5th ed. 1979). The term also applies to ‘unliquidated claim[s].’ Id. As used in indemnity contracts, the term ‘claim’ has been interpreted as referring to indemnity against liability.” Id.

“A third party claim for indemnity may be filed before the [claim] accrues, in order to accommodate and facilitate the whole litigation between the parties.” Burns & McDonnell Engineering Co., Inc., 834 S.W.2d at 758; see also Bond Diamond Co. v. Wilson, 325 S.W.2d 63, 66 (Mo.App.1959); Rule 55.32(f).

Accordingly, the specific language used in the indemnity contract or provision can make a significant difference in the rights of the parties and when the lawsuit can be filed.  This could make a difference as to whether the party can even invoke the indemnification provision.  Therefore, it is well-advised that any person searching for an indemnity contract or an agreement containing such a provision, should contact an attorney experienced with drafting and litigating indemnity provisions.

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To sum up this article, every construction contract should have certain provisions in order to safeguard the parties and to ensure that the other provisions in the contract function as they should.

The following are the 7 clauses that should be in every contract:

  1. Force Majeure Clause (Act of God)
  2. No Third Party Beneficiaries
  3. Counterparts (Facsimile Signing)
  4. Interpretation & Headings of Contract
  5. Severance Provision
  6. Choice of Law or Forum Selection Clause
  7. Time is of the Essence

While a contract can be valid and binding without these clauses, in a case where there is a close call or the contract is under heavy scrutiny, these provisions might make the difference between protecting and losing your rights under the contract.

That’s why it is important to consult with a knowledgeable attorney and retain him/her to draft your contract to assure that your legal rights are protected.

If you know of any contractual provisions that should be in a construction contract, or in any contract for that matter, please let us know in the comments section.

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