Best in Law: Reducing risk by avoiding sole-source contracts on construction projects
Commercial and residential property owners and managers engage in many projects to construct and maintain their properties.
From interior and exterior painting, flooring and lighting to paving and asphalt coatings, such as seal coat or asphalt slurry — owners put out bids and hire contractors. For these projects, if an owner requires the use of a specific product or particular brand of paint, flooring or sealcoating, that specification creates the need for a sole-source contract.
Sometimes, representatives of these manufacturers will even offer to write the specs for the owners to make sure their product is “the one” specified. The benefit to the manufacturer is clear; however, do they have the owner’s best interests in mind when creating these sole-source contracts?
In reality, owners whose projects require a specific brand or propriety product may actually be assuming additional and unnecessary risk. For example, who is responsible if the owner specifies that a bidding contractor use “Brand X” asphalt sealcoating product for a parking lot project and that product fails, proves undeliverable according to project deadlines or is the source of any number of problems?
California courts have grappled with this issue in various circumstances and, when presented with the problem, insurance companies have also responded similarly — and it is the owner or manager who is often left holding the bag.
The owner cannot look to the contractor for a product fail or delay in delivery because the contractor did exactly what the owner requested, sealcoat the parking lot with “Brand X.” Likewise, if “Brand X” cannot be timely delivered and the entire project is delayed, can the owner really look to anyone else? Remember, even if the manufacturer offered to and did write your spec, there is no contractual agreement between the owner and manufacturer — it is the contractor who is hired and […]