John Mark Goodman | BuildSmart
An Illinois federal court ruled in favor of steel subcontractor Nucor in its contract dispute with Direct Steel. The project involved the construction of pre-engineering metal buildings for the Army Corps of Engineers. The general contractor, Direct Steel, subcontracted with Nucor for the supply of steel materials. The contract included a “Must Ship By Date” of May 29, 2021, that was not a delivery deadline but was for price protection only. The provision provided as follows:
Any “Must Ship By Date” set forth in the Sales Documents is for purpose of price protection only. If the Products do not ship by the designated “Must Ship By Date” due to delays beyond [Nucor’s] control, including without limitation, Purchaser [Direct Steel] Delays, (a) the price provided in the Sales Documents may be increased by [Nucor] for any additional costs incurred by [Nucor], with such price increases shall be implemented by Change Order … issued by Seller, which shall be binding on [Direct Steel], and (b) [Nucor] shall invoice [Direct Steel] for the full amount of the purchase price of such Products.
Thus, under this provision, if the materials were not shipped by the specified date, Nucor would be entitled to a price escalation to account for any increased costs. When the materials were not shipped by the specified date, Nucor sought to recover its increased costs. Direct Steel objected, and litigation ensured.
The court sided with Nucor as a matter of law at the summary judgment, which it referred to as the “put up or shut up moment,” when the responding party must “come forward with the evidence it has.” Based on the evidence presented, the court found that Nucor was within its rights to request and was entitled to receive additional costs incurred because of delays beyond its control under the price protection clause. The court rejected Direct Steel’s defense that Nucor breached first by failing to deliver the materials by the “Must Ship By Date” since, under the contract, that date was only for price protection. The court reserved the issue of damages and attorneys’ fees for further proceedings. A copy of the court’s decision can be found here.
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.