Page 65 - CCD Magazine-Spring 2019

More importantly, the Court held that the subcontractor’s failure to provide any notice at all would not be fatal to the subcontractor’s claim unless the general contractor was prejudiced by the failure. In so holding, the Court recognized that the purpose of the notice requirement was to allow the owner an opportunity to mitigate costs that might result from the differing site condition. Id.
at 388.
While there may be some leniency when a subcontractor fails to timely provide notice to a general contractor of
a claim, or when a general contractor fails to provide an owner with notice, the law is not as forgiving when the roles are reversed. Entitlement to payment for additional work is not the same as entitlement to recover damages for an alleged default.
In Denver Ventures, Inc. v. Arlington Lane Corp., 754 P.2d 785 (Colo. App. 1988), a subcontractor committed
a breach of contract by unjustifiably stopping its performance after it had completed only twenty-five percent of the required work. The trial court held, and
a division of the Court of Appeals agreed, that the contractor was required to give the subcontractor notice and opportunity to cure. And because the contractor failed to do so, it was not entitled to recover any damages from the subcontractor.
The notice and cure provision in Denver Ventures, Inc. was fairly typical, and was in fact identical to the language found in the 1987 and 1997 versions of the AIA A401 subcontract. Id. at 788. Even though the subcontractor
in Denver Ventures, Inc. wrongfully stopped working, and even though the trial court found that the subcontractor was in breach for doing so, the contractor was not entitled to recover any damages from the subcontractor because it failed to provide the subcontractor with notice and an opportunity to cure as required by the subcontract. Id.
Despite what may appear to be different treatment
of parties to a construction contract, there may be justification for treating the scenarios differently. When a general contractor or subcontractor encounters a differing site condition and seeks an equitable adjustment, it is
not claiming breach of contract. Also, the work typically must be performed, whether or not notice is provided.
In contrast, where an owner seeks to hold a contractor liable for a backcharge or a contractor seeks to hold a subcontractor liable for a backcharge, it is asserting that a default has occurred under the terms of the contract. For that reason, contractual provisions requiring notice and an opportunity to cure typically must be followed unless doing so would be futile.
Colorado Construction & Design | 65