July 15, 2012 by Stephen
In certain cases, final acceptance can mean that the owner has acknowledged that the work met the requirements of the plans and specifications, barring the owner from later asserting differently. In an Ohio case, Beasley v. Monoko, Inc., 958 N.E.2d 1003 (Ohio App. 10th Dist. 2011), the Ohio Department of Transportation (“ODOT”) made final inspections and acknowledged final acceptance of work on a bridge painting contract. ODOT then made final payment to the contractor. Several years later, post-completion inspections connected with a statewide highway contractor kickback investigation, revealed that the original painting work had not been performed correctly. ODOT then sued the contractor arguing that its acceptance ODOT then sued the contractor arguing that its acceptance of the work did not mean that ODOT could not demand full compliance with the plans and specifications. The contractor argued that ODOT’s final inspection and acceptance of the work precluded all subsequent allegations that the work was not performed properly. The court relied on the common law and on specific language in the contract and found ODOT’s formal acceptance of the work was a legal acknowledgement that the work met the requirements of the plans and specifications. The court cited the following contract language:
The quoted language indicated that “final acceptance” was effectively a final acknowledgement of contract compliance and thus precluded any subsequent arguments that the contractor had not performed properly. The court therefore dismissed all claims against the contractor.
July 15, 2012 by Stephen
Contracts often define how final acceptance will occur, but that is not always the case. In federal government contracts, the contracting officer will often issue a letter formally “accepting” the work, or designated portions thereof. On the other hand, some form contracts avoid using the term “final acceptance” in favor of discussing the conditions the contractor must satisfy to obtain the release of “final payment.” For example, the Consensus DOCS standard “General Conditions” state that when “Final Completion” has been achieved, the contractor may invoice for its “Final Payment.”
Even though contracts may avoid using “final acceptance” language, the law will always recognize that at some point in the closeout process, the owner “accepts” the work as performed and the risk of loss passes to the owner. While the precise moment of “final acceptance” cannot always be determined, contractors should nevertheless be aware of the significance of this contract milestone and the restrictions it places on the owner’s right to subsequently require corrections to the work.
Copyright 2017 NJLien, LLC dba LienItNow. All rights reserved