PREFACE...........................................................................................xxi

ACKNOWLEDGEMENTS.....................................................................xxiii

ABOUT THE EDITORS........................................................................xxv

CHAPTER ONE....................................................................................1

CONTRACTOR LICENSING LAWS.......................................................1

I. OVERVIEW OF CONTRACTOR LICENSING LAW..................1
A. Purpose of Contractor License Laws......................................1
B. Applicability of the License Law.............................................1
C. Violation of License Law........................................................2

II. EXCEPTIONS AND LICENSE CLASSIFICATIONS...................2
A. Exceptions to License Law.....................................................2
B. License Classifications Generally............................................5
C. Class A -- General Engineering Contractor...............................5
D. Class B -- General Building Contractor.....................................5
E. Class C -- Specialty Contractors.............................................6
F. License Classifications in Public Works...................................8
G. Certification...........................................................................8

III. ISSUANCE OF THE CONTRACTOR’S LICENSE......................8
A. Business Form........................................................................8
B. Bonding Requirements.............................................................9

IV. QUALIFYING PERSONS.........................................................10
A. Introduction..............................................................................10
B. Individuals................................................................................10
C. Partnerships.............................................................................10
D. Corporations.............................................................................10
E. Responsible Managing Officers, Responsible Managing Employees and Qualifying Partners....11
F. State Can Suspend Contractor’s License If Listed Personnel Are Associated With Another License That Owes State Taxes......................................................................12

V. PENALTIES FOR VIOLATION OF LICENSE LAW.................12
 
A. Overview.............................................................................12
B. A License Is Required To Seek Relief In Court.......................13
C. Substantial Compliance with Licensing Law...........................14
D. An Unlicensed Contractor Can Be Required To Disgorge All Compensation Paid To It...15
E. Additional Licensing Requirements – Public Works................15
F. Civil Penalties/Orders of Abatement......................................16

VI. MISCELLANEOUS ISSUES...........................................................16
A. Checking a License..............................................................16
B. Reciprocity..........................................................................16
C. Fingerprinting Requirements..................................................17
D. Transfer of Ownership of License............................................17
E. Hiring of Unlicensed Contractors – Risks................................17
F. Satisfaction of Bankruptcy Obligations....................................17
G. Special Workers Compensation Issues for Roofing Contractors..18
H. Home Improvement Salespersons............................................18
I. Swimming Pool Issues.............................................................18

ENDNOTES...............................................................................................20

CHAPTER TWO.........................................................................................21

PUBLIC CONTRACT BIDDING AND BID DISPUTES...........................21

I. PUBLIC CONTRACT COMPETITIVE BIDDING REQUIREMENTS......21
A. Statutory Framework................................................................21
B. Statutory Purpose....................................................................21
C. Statutory and Judicial Exceptions..............................................22
D. Failure to Abide by Competitive Bidding Procedures:  Contractors Beware...24
E. Monetary Thresholds................................................................24

II. SELECTION OF DESIGN PROFESSIONALS............................25
A. Statutory Requirements...........................................................25
B. Design Services Contracts.......................................................26

III. PUBLIC DISCLOSURE OF RFP PROPOSALS.........................28

IV. PLANS AND SPECIFICATIONS...............................................28
A. Governing Body Adoption of Plans and Specifications...........29
B. Other Agency Approvals.....................................................29
C. Bidder Opportunity to Review Plans and Specifications.........29
D. Changes to Plans and Specifications...................................29
E. Ownership and Reuse of Plans and Specifications................29

V. PROJECT DELIVERY METHODS.............................................30
 
A. Design-Bid-Build...................................................................30
B. Construction Management.....................................................32
C. Multiple-Prime Contracting.....................................................35
D. Design-Build.........................................................................36
E. Job Order/Annual Contracts...................................................37

VI. PREQUALIFICATION PROCEDURES.......................................39

VII. BID DOCUMENT REQUIREMENTS......................................40
A. Notice Inviting Bids/Request For Bids.....................................40
B. Instructions for Bidders..........................................................48
C. Bid Forms............................................................................50

VIII. BID OPENING/RETURN OF LATE BIDS.................................50

IX. BID MISTAKE AND WITHDRAWAL..........................................51
A. Statutory Grounds for Withdrawal.........................................51
B. Forfeiture of Bid Security.....................................................53
C. Bidder Challenge to Forfeiture of Bid Security........................53
D. Award after Withdrawal or Forfeiture of Bid Security...............53
E. Participation in Re-Bid.........................................................54
F. Subcontractor Bid Mistakes.................................................54

X. EVALUATION AND REJECTION OF BIDS.............................55
A. Bid Responsiveness..............................................................55
B. Bidder Responsibility.............................................................56
C. Subcontractor Listing Law......................................................58
D. Waiver of Irregularities............................................................61
E. Bid Protests..........................................................................63

ENDNOTES..............................................................................70

CHAPTER THREE.....................................................................71

CONTRACT DRAFTING............................................................71

I. INTRODUCTION....................................................................71

II. CONTRACT FORMATION.....................................................71
A. Capacity..............................................................................71
B. Legality................................................................................72
C. Agreement...........................................................................72
D. Consideration.......................................................................74

III. MOST COMMON CONSTRUCTION CONTRACT TYPES.....74
A. General...................................................................................74
B. Lump Sum Contracts................................................................74
C. Unit Price Contracts.................................................................75
D. Cost Plus Contracts.................................................................75
E. Cost Plus Contracts with a Guaranteed Maximum Price..............76
F. Design/Build Contracts.............................................................76

IV. DRAFTING STEPS.................................................................77
A. Ten Practical Tips....................................................................77
B. Checklists...............................................................................81

V. RULES OF INTERPRETATION................................................87
A. Ambiguity or Uncertainty.........................................................87
B. Extrinsic Evidence..................................................................87
C. Choice of Law........................................................................88
D. Conditions.............................................................................88
E. Headings...............................................................................89
F. Implied Provisions...................................................................89
G. Inconsistencies......................................................................90
H. Written and Printed Matter.......................................................90
I. Meaning of Words....................................................................90
J. Custom..................................................................................90
K. Assignment...........................................................................91

VI. THE CONTRACT DOCUMENTS............................................91
A. Preliminary Statement............................................................91
B. The Bidding Documents.........................................................92
C. Owner-Contractor Agreement..................................................93
D. General Conditions.................................................................93
E. Supplementary & Special Conditions.......................................93
F. Drawings..............................................................................94
G. Specifications.......................................................................95
H. Addenda...............................................................................96
I. Modifications..........................................................................96

VII. KEY CONTRACT PROVISIONS...........................................96
 
A. Introduction..........................................................................96
B. Scope of Work.....................................................................97
C. Contract Price......................................................................97
D. Contract Time, Time Extensions and Delays...........................97
E. Scheduling...........................................................................98
F. Changes...............................................................................98
G. Insurance.............................................................................99
H. Indemnification.....................................................................101
I. Termination and Suspension of Work......................................102
J. Contract Documents and Order of Precedence........................104
K. Notices...............................................................................104
L. Dispute Resolution...............................................................104
M. Miscellaneous (Boilerplate) Provisions..................................105

VIII. CONCLUSION..................................................................106

CHAPTER FOUR.....................................................................107

INSURANCE & RISK MANAGEMENT........................................107
 
I. RISK MANAGEMENT STRATEGIES.......................................107
A. Loss Prevention Programs.....................................................107
B. Contractual Risk Allocation....................................................108
C. Other Forms of Insurance Coverage........................................108

II. INDEMNITY...................................................................................108
A. Indemnification on Construction Projects..............................108
B. Public Works Design Services Contracts; Disclosure of Indemnification Provisions..112

III. THE ROLE OF INSURANCE ON CONSTRUCTION PROJECTS...........................113
A. General Liability/Worker’s Compensation Insurance............113
B. Insurance Issues in Construction Contracts........................115
C. Builders Risk Insurance and Earthquake Coverage (Public Works).......119

IV. STATUTORY LIMITS ON CONSTRUCTION DEFECT LAWSUITS...........120

ENDNOTES...............................................................................................122

CHAPTER FIVE........................................................................................123

SURETY BONDS......................................................................................123

I. Basics Regarding Surety Bonds For Construction Projects........123
A. Public Works......................................................................123
B. Private Work of Improvement................................................123
C. Who is Protected, in General?..............................................124
D. Specific Bonds....................................................................124

II. Sufficiency Of The Bond And The Surety....................................127
A. Initial Submissions of Payment and Performance Bonds on Public Works....129
B. Submission of Payment Bonds..............................................131
C. Submission of Performance Bonds.........................................132
D. Practical Considerations........................................................132

III. MILLER ACT AND FAR REQUIREMENTS............................132

IV. Surety Bond Provisions of Standard Form Contracts.................133

V. Surety Response to a Performance Bond Claim.........................134
 
VI. Surety Defenses.........................................................................136  
A. Material Alteration or Release of the Construction Contract.......136
B. Premature Payment by the Obligee........................................136
C. Failure to Give Notice............................................................136
D. Misrepresentations in the Application of the Bond....................136
E. Time Limitations....................................................................137
F. The Obligation of a Surety Is Not Greater Then That of Its Principal......137
G. The Surety Can Require a Claimant to Pursue Other Remedies..........137
 
CHAPTER SIX....................................................................................139

PREVAILING WAGES.........................................................................139

I. Introduction....................................................................................139
A. Purpose...............................................................................139
B. Historical Perspective............................................................139
C. The Federal Davis-Bacon Act.................................................140

II. What Are Prevailing Wages?.........................................................140
A. What is a Public Works Project?............................................141
B. When Does a Private Work of Improvement Become a Public Work Project?..144
C. How is the Prevailing Wage Rate Determined?.......................146
D. What is the Proper Prevailing Wage Rate?.............................146

III. Who Must Be Paid Prevailing Wages?............................147
A. Workers Employed by Subcontractors and Contractors.........148
B. Apprentices.......................................................................150
C. Volunteers.........................................................................150

IV. Who is Responsible for the Payment of Prevailing Wages?........151
A. What are the Contractor’s and Subcontractor’s Responsibilities?.........151
B. What are the Awarding Body’s Responsibilities?..................155

V. How Are Prevailing Wages Enforced?..........................................157 
A. Enforcement by the DLSE..................................................158
B. Enforcement by the Awarding Body.....................................159
C. Private Actions Against the Contractor.................................160
D. Private Actions Against the Awarding Body..........................162

VI. What is the Liability for Failure to Comply with Prevailing Wage Laws?.....................................................................................164
A. Contractor’s and Subcontractor’s Liabilities............................164
B. Awarding Body’s Liabilities...................................................167

VII. Labor Code Section 2810:  Additional Responsibilities for Individuals and Entities Contracting for Construction - Employee’s Right to Sue.................................................................168

VIII. Labor Compliance Programs.........................................170
A. Benefits of an LCP..............................................................171
B. Mandatory Requirements for an LCP.....................................172
C. LCP Approval......................................................................172
D. LCP Audit Responsibilities...................................................176
E. LCP Investigative Responsibilities.........................................177
F. LCP Enforcement Responsibilities........................................178
G. Revocation of an LCP..........................................................179

IX. Project Labor Agreements.............................................................180
A. What is a Project Labor Agreement?.....................................180
B. Validity of PLAs...................................................................180
C. Arguments For and Against PLAs.........................................183

ENDNOTES...............................................................................................184

CHAPTER SEVEN...................................................................................191

PROJECT DOCUMENTATION.............................................................191

I. Introduction.....................................................................................191

II. Keys to Proper Record Keeping....................................................192
A. Establish an Organized System of Project Documentation....192
B. Categorize and Properly Store All Written Records...............193
C. Computer and Electronic Data (and Document) Storage........193

III. Types of Project Records................................................................193
 
A. Contract Documents:............................................................194
B. Correspondence:..................................................................194
C. Bonds and Insurance Certificates:..........................................195
D. Daily Construction Reports:...................................................196
E. Telephone Conversation Records:...........................................197
F. Engineering, Inspection and/or Test Reports (if/as required):......197
G. Logs of Change/Clarification Related Documents:....................197
H. Change Orders.....................................................................198
I. As-built Drawings:..................................................................198
J. Construction Schedule and Schedule Updates:........................198
K. Minutes of Project Meetings:..................................................199
L. Job Photographs and Videos:..................................................200
M. Progress Payment Records:..................................................200
N. Releases and Joint Checks:...................................................201
O. Disputed Items and Issue Lists and Related Logs:...................201
P. Statutory Claims:..................................................................202

IV. Practice Pointers..................................................................202
A. Introduction.............................................................................202
B. Notice to Proceed....................................................................202
C. Schedule of Values..................................................................202
D. Shop Drawings and Submittals.................................................203
E. Meeting Minutes.....................................................................203
F. Requests for Payment.............................................................204
G. Waivers and Releases............................................................204
H. Change Orders.......................................................................204
I. Notices of Completion...............................................................205
J. Contractually Required Notices................................................206

V. Proper Project Monitoring.............................................................206

VI. Miscellaneous Legal Issues Relating to Project Documents........207
A. Owner’s Implied Warranty of Project Plans and Specifications......207
B. Payment Bonds.......................................................................207
C. E-Discovery.............................................................................208

VII. Conclusions and Recommendations:.............................................208

CHAPTER EIGHT....................................................................................211

CHANGE ORDERS AND EXTRA WORK...........................................211

I. INTRODUCTION...........................................................................211
A. The Changes Clause...............................................................211
B. Types of Changes...................................................................212
C. Authority to Issue Changes.....................................................213
D. Typical Clauses.....................................................................213
E. Duty to Proceed With Changed Work......................................214
II. THE CHANGE ORDER................................................................215
 
A. Preliminary Statement........................................................215
B. Change Order Form............................................................215
C. Essential Elements of the Change Order Process.................216
D. Pricing Alternatives............................................................217
E. Deductive Changes............................................................219
F. Special Rules with Regard to Changes on Public Works.......219
G. Performance of the Work...................................................220

III. COMMON CAUSES OF CHANGES...........................................220

IV. PREPARING AND EVALUATING THE CHANGE ORDER REQUESTS......221
A. Introduction.............................................................................221
B. Checklist for Preparing and Evaluating the Change Order Requests......222

V. PROCEEDING UNDER PROTEST.........................................223
A. Preliminary Statement..........................................................223
B. Preserving the Right to a Change...........................................224
C. Recording Time and Cost Impacts..........................................224
D. Mechanic’s Lien Rights.........................................................226
VI. RESERVATIONS AND RELEASES IN CHANGE ORDERS......226
A. Preliminary Statement...........................................................226
B. Waivers and Releases...........................................................227
C. Reservations.........................................................................227

VII. MATERIAL CHANGES:  THE DOCTRINES OF ABANDONMENT OF CONTRACT AND CARDINAL

CHANGES..................................................................................228
A. Introduction.............................................................................228
B. Abandonment of Contract.........................................................228
C. Cardinal Changes....................................................................229
D. Amelco Electric v. City of Thousand Oaks................................229

VIII. CONCLUSION..........................................................................230

CHAPTER NINE...............................................................................231

PROJECT SCHEDULING.................................................................231

I. INTRODUCTION...........................................................................231

II. TYPES OF SCHEDULES..............................................................231
A. PERT and Critical Path Method...............................................232
B. Bar Chart/Gantt Chart.............................................................233

III. PRE-CONSTRUCTION PLANNING, PREPARATION AND USE OF SCHEDULES.......234
A. General....................................................................................234
B. Owner.....................................................................................235
C. Contractor...............................................................................236
D. Scheduling Consultants............................................................238

IV. COMMON CONTRACT PROVISIONS..................................239
A. Initial Submission Requirements............................................239

V. USE OF SCHEDULES DURING CONSTRUCTION.................244

VI. USE OF SCHEDULES FOR DISPUTE RESOLUTION AND IN LITIGATION....246
A. Claims Submitted During the Project.....................................246
B. Methods Analyzing Post-completion Schedule Claim..............247

VII. CONCLUSION...................................................................248

ENDNOTES.............................................................................249

CHAPTER TEN.........................................................................251

PROMPT PAYMENT.................................................................251

I. CONTRACT REQUIREMENTS – GENERALLY.........................251
A. Schedule of Values...............................................................251

II. REVIEWING AND PROCESSING REQUESTS FOR PAYMENT......252
A. Procedure for Review, Evaluation, and Payment of the Contractor’s Invoices........252

III. PROMPT PAYMENT/RIGHT TO STOP WORK STATUTES........253
A. Private Works of Improvement (Civil Code § 3260, et seq.).......253
B. Public Works of Improvement................................................256
C. Do Statutory Prompt Payment Penalties Adequately Protect Subcontractors?.....258

IV. PAY-WHEN-PAID PROVISIONS................................................259

V. PAYMENTS TO ARCHITECTS, ENGINEERS, SURVEYORS, ET AL......259
 
CHAPTER ELEVEN......................................................................261
 
TERMINATION.............................................................................261

I. INTRODUCTION........................................................................261

II. TERMINATION FOR CAUSE.....................................................261
A. Introduction.............................................................................261
B. Termination of the Contractor....................................................262
 
III. TERMINATION FOR CONVENIENCE.....................................272

ENDNOTES...............................................................................274

CHAPTER TWELVE...................................................................277

PROJECT CLOSEOUT...............................................................277

I. FINAL SUBMISSIONS AND PAYMENT...................................277
A. Project Closeout Objectives....................................................277
B. Closeout begins....................................................................278
C. Final Submissions; Contract Close-out..................................286

ENDNOTES..............................................................................290

CHAPTER THIRTEEN...............................................................291

CONTRACTOR CLAIMS...........................................................291

I. CONTRACTOR’S CLAIMS....................................................291
A. INTRODUCTION................................................................291
B. TIME RELATED CLAIMS...................................................291
C. PAYMENT RELATED CLAIMS..........................................306
D. CONTRACTOR’S REMEDIES...........................................308

II. MAJOR CAUSES OF CONSTRUCTION CLAIMS..................313
A. CHANGES.........................................................................313
B. CHANGED OR DIFFERING SITE CONDITIONS.....................317
C. SUSPENSION OF THE WORK............................................320
D. DESIGN DEFICIENCIES AND RELATED PROBLEMS...........322

ENDNOTES..................................................................................324

CHAPTER FOURTEEN..................................................................327

OWNER CLAIMS..........................................................................327

I. INTRODUCTION........................................................................327

II. TYPICAL OWNER’S CLAIMS....................................................327
A. Delays - Late Completion.......................................................327
B. Failure to Comply with the Plans and Specifications -- Improper, Incomplete and/or Defective Work...329

III. OWNER’S REMEDIES..........................................................331
A. Withholding Payment.............................................................331
B. Termination...........................................................................331
C. Rescission............................................................................333
D. Action for Damages................................................................334

ENDNOTES...............................................................................................335

CHAPTER FIFTEEN...............................................................................337

PUBLIC WORKS CLAIMS PROCEDURES........................................337

I. FALSE CLAIMS.............................................................................337
A. What the Act is and What the Act Does.................................337
B. Definition of a Claim..............................................................338
C. The Act Requires Knowledge.................................................338
D. The Act Prohibits Specified Conduct.......................................338
E. False Claims Under the Act...................................................339
F. The Act Imposes Treble Damages and Civil Penalties...............341
G. The Act Imposes Third Party Liability......................................342
H. The Act Imposes Joint and Several Liability.............................342
I. The Act Excludes Certain Claims.............................................343
J. Who May Bring An Action on a False Claim.............................344
K. Practical Advice to Public Works Contractors and Owners........345

II. GOVERNMENTAL TORT LIABILITY.....................................346
A. Vicarious Liability for Acts of Employees.............................346
B. Liability for Dangerous Conditions of Public Property............347
C. Liability for Acts or Omissions of Independent Contractors or Third Persons....348
D. Cal. Gov’t Code Claims Procedures...................................352

III. PUBLIC CONTRACT CODE DISPUTE RESOLUTION PROCEDURES – P.C.C. § 20104..........354
 
A. P.C.C. § 7100: Acceptance of Payment as Waiver of Claims Against Public Entities...354
B. P.C.C. § 20104 – Resolution of Construction Claims............354
C. Arbitration........................................................................358

CHAPTER SIXTEEN................................................................361

THE ARCHITECT/ENGINEER...................................................361

I. INTRODUCTION..................................................................361
 
A. Background and Overview of the Design Profession.............361
B. The Architect..........................................................................363
C. The Engineer...........................................................................365

II. STATE LAWS GOVERNING THE PRACTICE OF ARCHITECTURE AND ENGINEERING............370
A. Statutory Regulation of Architects.........................................370
B. Statutory Regulation of Engineers..........................................374

III. ASSOCIATIONS OF ARCHITECTS AND ENGINEERS.........377
A. Architects’ Associations.....................................................377
B. Engineers’ Associations......................................................378

IV. THE OWNER-ARCHITECT/ENGINEER AGREEMENT.......380
A. Background..........................................................................380
B. Types of Standardized Agreements........................................382
C. Owner Generated Contracts and Related Issues.....................383

V. THE ARCHITECT/ENGINEER’S RESPONSIBILITIES.........384
A. Design.................................................................................384
B. Bidding and Negotiation.........................................................386
C. Construction.........................................................................388
D. Post Construction.................................................................398

VI. THE ARCHITECT/ENGINEER’S LIABILITY.........................398
A. Liability to the Owner............................................................398
B. Liability to the Contractor......................................................404
C. Liability to Subcontractors.....................................................405
D. Liability to Workers and Visitors............................................405

VII. PROFESSIONAL LIABILITY INSURANCE.............................406

VIII. CONCLUSION....................................................................409

ENDNOTES...............................................................................410

CHAPTER SEVENTEEN.............................................................413

PREPARING AND DEFENDING CLAIMS.....................................413

I. PREPARATION AND PRESENTATION OF CLAIMS -- THE CONTRACTOR’S APPROACH........413
A. Introduction............................................................................413
B. Identification..........................................................................413
C. Investigation...........................................................................415
D. Preparation............................................................................416
E. Presentation..........................................................................419
F. Use Of Cpm Scheduling In Delay Claims..................................420
G. Alternate Methods Of Proving Damages...................................422

II. EVALUATING AND DEFENDING CONSTRUCTION CLAIMS:  THE OWNER’S PERSPECTIVE....424
A. Introduction......................................................................424
B. Evaluating And Defending Contractor Claims.......................425
C. Statutory Remedies..........................................................427

ENDNOTES...............................................................................430

CHAPTER EIGHTEEN................................................................431

MECHANICS’ LIENS AND  STATUTORY REMEDIES...................431

I. INTRODUCTION.....................................................................431

II. THE MECHANICS’ LIEN........................................................431
A. Works Subject To A Lien...................................................432
B. Persons Entitled To Claim A Mechanic’s Lien......................432
C. Persons Not Entitled To Claim A Mechanics’ Lien................432
D. Effect Of The Mechanics’ Lien............................................433
E. Steps To Perfect A Mechanics’ Lien...................................433

III. THE PRELIMINARY 20-DAY NOTICE................................434

IV. RECORDING A MECHANICS’ LIEN.................................436
A. Preparing A Mechanics’ Lien.............................................438
B. Recording The Lien...........................................................438
C. The Foreclosing Of The Lien...............................................438
D. Lien Priority......................................................................439
E. Arbitration.........................................................................440

V. THE STOP NOTICE RIGHT AND BOND CLAIMS- PRIVATE WORKS.....440
A. Procedural Requirements And Contents.................................440
B. Payment Bond (Private Works)..............................................442

VI. CALIFORNIA PUBLIC WORKS REMEDIES - PAYMENT BOND AND STOP NOTICE RIGHTS.....443
A. Payment Bonds – California Public Works............................443
B. Amount Of The Bond...........................................................443
C. Direct Cause of Action.........................................................443
D. Procedural Requirements to Making Claim............................444

VII. STOP NOTICES – CALIFORNIA PUBLIC WORKS...............445
A. Who Can Serve a Stop Notice?..............................................445
B. Procedural Requirements to Enforce Stop Notice Rights...........445
C. Amount of Stop Notice...........................................................447
D. Enforcement Of Stop Notice...................................................447

VIII. MILLER ACT CLAIMS - FEDERAL PROJECTS....................447

ENDNOTES..............................................................................450

CHAPTER NINETEEN................................................................451
 
ALTERNATIVE DISPUTE RESOLUTION..........................................451

I. OVERVIEW OF ALTERNATIVE DISPUTE RESOLUTION (ADR) PROCESSES.....451

II. ARBITRATION OF CONSTRUCTION DISPUTES................453
A. Advantages and Disadvantages of Arbitration.......................453
B. Compelling and Resisting Arbitration...................................464
C. Waiver of Arbitration Rights................................................478
D. Consolidation of Arbitration Proceedings..............................480
E. Scope of Arbitrator’s Authority............................................482
F. Binding Effect of Arbitration Awards.....................................485
G. Preemption of State Arbitration Acts by Federal Arbitration Act (FAA)......487

III. MEDIATION OF CONSTRUCTION DISPUTES......................489
A. Overview: The Nature of the Mediation Process....................489
B. Advantages and Disadvantages of Mediation........................491
C. Detailed Legal Discussion of Mediation Issues.....................492
D. Enforcement of Mediated Settlement Agreements................497

IV. OTHER FORMS OF ALTERNATIVE DISPUTE RESOLUTION.....501
A. Contractually Required ADR.............................................501
B. ADR Required by Court Order...........................................505
C. ADR Required by Statutes...............................................506
D. “Private Trials” and “Mini-Trials”.........................................517

V. ENFORCEMENT OF ADR SETTLEMENT AGREEMENTS........519

VI. CONCLUSION AND RECOMMENDATIONS..........................520

ENDNOTES.............................................................................522

CHAPTER TWENTY.................................................................523

BANKRUPTCY.........................................................................523

I. INTRODUCTION....................................................................523

II. THE AUTOMATIC STAY.......................................................525 
A. The Impact Of The Automatic Stay.......................................525
B. Violations Of The Automatic Stay.........................................527
C. Relief From the Automatic Stay............................................528
D. Recent Changes In The Law Relating To The Automatic Stay..528

III. EXECUTORY CONTRACTS IN BANKRUPTCY...................530
A. Definition Of “Executory Contracts”.....................................530
B. Assumption Of Executory Contracts...................................530
C. Assignment Of Executory Contract.....................................532
D. Rejection Of Executory Contracts.......................................532
E. Termination Clauses..........................................................533

IV. ISSUES WHEN THE OWNER FILES A BANKRUPTCY CASE.........533
A. California Civil Code § 3110.5.............................................533
B. Civil Code § 3260.2...........................................................534
C. Mechanics’ Lien Issues.....................................................536
D. Service of a Bonded Stop Notice........................................538
E. Chapter 11 Plan Considerations – The Proof of Claim...........539

V. ISSUES WHEN A CONTRACTOR FILES A BANKRUPTCY CASE.....540
A. Payment And Performance Bonds..........................................540
B. Termination...........................................................................541

VI. ISSUES WHEN A SUBCONTRACTOR OR SUPPLIER FILES A BANKRUPTCY CASE.......541
A. Was The Subcontractor Or Supplier Bonded?........................541

VII. PREFERENCE LIABILITY OF CONTRACTORS, SUBCONTRACTORS AND SUPPLIERS...542
A. What Is A Preference?.....................................................542
B. Defenses To Preference Claims........................................542
C. Date Of Transfers............................................................545

VIII. MISCELLANEOUS BANKRUPTCY ISSUES...................545
A. Reclamation....................................................................545

ENDNOTES........................................................................549

CHAPTER TWENTY-ONE....................................................551
 
HOME IMPROVEMENT CONTRACTS..................................551

I. INTRODUCTION..............................................................551

II. FORMATTING................................................................552

III. REQUIRED PROVISIONS...............................................552

IV. STATUTORY NOTICES..................................................557

V. SERVICE AND REPAIR CONTRACTS..............................558
 
VI. PENALTIES FOR FAILURE TO COMPLY........................559

VII. EFFECT OF NON-COMPLIANCE...................................559

VIII. CONCLUSION.............................................................561

ENDNOTES........................................................................562
 
CHAPTER TWENTY-TWO...................................................565

PROCUREMENT.................................................................565

I. INTRODUCTION..............................................................565
A. What Is A Contract?........................................................565
B. Law Governing Contracts..................................................565

II. THE ELEMENTS OF CONTRACT FORMATION..................567
A. Introduction.......................................................................567
B. Capacity..........................................................................567
C. Mutual Assent...................................................................567
D. Consideration....................................................................571
E. No Defenses to Contract Formation May Exist.....................572
F. Contract Formation Before the UCC and Outside of the UCC: The Mirror Image Rule.....575
G. Contract Formation Under the California Commercial Code........577
H. “Firm Offers”..........................................................................578

III. TERMS AND INTERPRETATION UNDER ARTICLE 2........578
A. The “Battle of Forms” Under Section 2207: Terms in Form Contracts.....578
B. Implied Terms.....................................................................584
C. Shipment, Passing of Title and Risk of Loss..........................585
 
IV. WARRANTIES, PERFORMANCE, AND REMEDIES UNDER ARTICLE 2.....587
A. Warranties..........................................................................587
B. Limitations on  Liability.........................................................591
C. Performance Issues.............................................................591
D. Remedies...........................................................................599

V. SPECIAL ISSUES IN THE CONSTRUCTION INDUSTRY....604
 
A. Quotations to Contractors in California.................................604
B. Mistakes On A Quotation And Withdrawal...........................605
C. Purchase Orders and Buyer’s Terms...................................605
D. Devices to Secure Performance..........................................606

VI. THE COMMERCIAL CODE...............................................607 
A. Preface............................................................................607

 
APPENDIX A.............................................................................609

PREVAILING WAGE EXHIBITS..................................................609

Exhibit A: General Prevailing Wage Determination................610

Exhibit B: Form A-1-131:  Public Works Payroll Reporting Form........616

Exhibit C: Form PW26:  Statement of Employer Payments....618

Exhibit D: Form DAS140:  Public Works Contract Award Information..619

Exhibit E: Form DAS142:  Requests for Dispatch of an Apprentice......620

Exhibit F: Form CAC2:  Training Fund Contribution Form.  621

Exhibit G: Form DAS 13:  Extract of Public Works Contract 622

Exhibit H: Form PW33:  Civil Wage and Penalty Assessment  623
 
Exhibit I: Notice of Withholding of Contract Payments.........627

Exhibit J: Notice of Transmittal............................................629

Exhibit K: Notice of Opportunity to Review Evidence  Pursuant to Labor Code Section 1742(b)...630

APPENDIX B.........................................................................................633

CLOSEOUT EXHIBITS...........................................................................633

Exhibit A: Final Payment and Retention Release Checklist....634
Exhibit B: Warranty.................................................................635
Exhibit C: Conditional Waiver and Release Upon Final Payment.........636
Exhibit D: Unconditional Waiver and Release Upon Final Payment.....637
Exhibit E: Final Statement of Contract Account......................638
Exhibit F: Declaration to Procure Payment and Release of Contract Rights.....639
Exhibit G: Release of Mechanic’s Lien....................................640
Exhibit H: Release of Payment Bond Claim............................641
Exhibit I: Release of Stop Notice.............................................642
Exhibit J: Withdrawal of Lis Pendens......................................643
Exhibit K: Consent of Surety to Release of Final Payment......645
Exhibit L: Subcontractor’s Sworn Statement Regarding Final Payments to Sub-subcontractors and Suppliers......................................................................647
Exhibit M: Subcontractor’s Sworn Statement and Warranty Regarding Continuing Insurance Obligations.........649
Exhibit N: Notice of Completion.................................................650
Exhibit O: Notice of Recordation of Notice of Completion or Notice of Cessation...651