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ConstructionWebLinks.com
Ashcraft,
Bloomquist, Inc. ("ABI"), as general contractor,
entered into an agreement with the project owner to remodel
a shopping center. ABI then subcontracted with Werner to
remove and reinstall all storefront signage at the project
for a total price of $26,700. Pursuant to the subcontract,
Werner removed the signs and was paid $13,260 for that work.
After
the signs were taken down, the owner decided not to reinstall
the old signs but instead to obtain new ones. ABI executed
a change order with the owner to delete reinstallation of
the old signs from its scope of work. ABI then informed
Werner that it was discontinuing the remaining work under
the subcontract. Werner sued ABI for breach of contract.
The trial court agreed with Werner that ABI had breached
the agreement and awarded Werner $13,400 in damages. ABI
appealed, and the Missouri Court of Appeals affirmed the
trial court judgment. Werner v. Ashcraft, Bloomquist,
Inc., 10 S.W. 3d 575 (Mo. App. E.D. 2000).
In
its decision, the Court of Appeals repeatedly relied on
one fact: ABI had made no provision in its subcontract with
Werner for a deductive change order with the owner to delete
reinstallation of the signs. This lack of a flowdown clause
left the contractor with no legal basis to reduce the subcontractor's
scope of work.
The
court rejected ABI's argument that the doctrine of impossibility
excused its obligation to perform under the agreement with
Werner. The doctrine of impossibility applies when unforeseen
events, such as an act of God in the form of extreme and
unusual weather conditions or the death of a party, render
performance impossible. The court held that the deductive
change order between ABI and the owner was not the type
of unexpected event that could warrant application of the
doctrine to release ABI from liability for its breach.
ABI
also asserted the doctrine of commercial frustration as
a defense. Under this doctrine, if the happening of an event
not foreseen and not caused by or under the control of the
parties has destroyed either the value of the performance
or the purpose of the contract, then the parties are excused
from further performance. The court held that this doctrine
was not applicable to ABI's situation because the deductive
change order between ABI and the owner was reasonably foreseeable
and that ABI should have provided for such contingencies
in its contract with Werner. The court concluded that by
not providing for such contingencies, ABI assumed the risk.
As
a third defense, ABI argued that the owner's actions frustrated
and prevented ABI from completing its subcontract with Werner.
The court also rejected this defense because the subcontract
placed no conditions on ABI's performance. If ABI truly
intended to condition its performance on the owner's conduct,
there should have been some indication of this intent. However,
the court found no indication in the subcontract or by the
parties' actions that ABI's performance was to be contingent
on the owner's acquiescence or performance. To the contrary,
ABI unconditionally contracted with Werner to remove and
reinstall signs at the shopping center.
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