Melissa Dewey Brumback | Construction Law in North Carolina
What if you are told that your own design services are no longer needed or welcome on a project? Can they do that? What happens then? How do you protect yourself.
As you probably realize, while rare, the Owner does have the legal right to fire you “for cause”. See B101 §9.4, as long as the Owner gives you 7 days written notice. In fact, the Owner can terminate your contract for any reason at all (maybe you root for the wrong basketball team?) by terminating you for convenience (i.e., for any reason whatsoever) under B101 §9.5, again with 7 days written notice.
As with Contractor terminations, the money you get when fired for convenience is much greater than when you are terminated for cause. If you are fired “for convenience”, you get paid for all services previously rendered as well as termination expenses, including anticipated profit on the value of services not performed. See B101 §9.7.
But, what about when you are terminated for cause? While unusual, this can–and does– happen. It means you will not be seeing the lost, but anticipated, profits on the job. Usually this is not as significant as a contractor termination, as during the construction phase you are presumably being paid monthly pursuant to a written contract.
If you are being fired, document everything! Document what has happened, the status of submittals or product samples that you may have but have not yet approved, the pending dates with inspectors—you name it. Put together a nice letter to the Owner telling them everything currently going on with the project. This will protect you as much as it protects the owner.
Secondly, notify your subconsultants. The owner may want them to continue on—you will have to have frank discussions with them about whether they are willing to continue if you are terminated, and in general they will not be able to do so unless you assign the agreement. This is leverage you can use while exiting stage left—use it to get better termination terms or protections from the Owner.
Finally, if you are being terminated because the Owner does not agree with your pay application or work completed determinations, document those disagreements as well.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.