Affirmed: The Contract is King in Virginia

Norfolk, VA

We have discussed the overwhelming need for precision in construction contract drafting on several occasions here at Musings.  This need is illustrated with great clarity by the litigation surrounding the Granby Towers in Norfolk, Virginia.  The circumstances surrounding the Granby Towers debacle have been well documented.   For that reason, I will not re-iterate them here.  This litigation continues to swirl and involved interpretation of pay if paid clauses, financial contingency clauses (thanks @timrhughes), and a large number of other claims by contractors, subcontractors and construction material suppliers.

Now, as pointed out at the Virginia Real Estate, Land Use & Construction Law blog by my good friend Heidi Meinzer of Bean Kinney & Korman, the 4th Circuit Court of Appeals upheld the Eastern District of Virginia’s decision to enforce a pay if paid clause in the contract between Turner Construction and Universal Concrete.  This decision was despite an argument that the contract between the Owner and Turner created an ambiguity.  Check out the opinion here.

The lesson from these cases and this latest 4th Circuit case?  The contract is king in Virginia.  Even in an extreme case such as the Granby Towers mess, the Courts in Virginia will stick to the contract.  While this strict adherence to the deal hurt many the players at Granby Towers, the lesson is not all negative.   Frankly, I find the strict interpretation of contracts to be a good thing.  Contractors and subcontractors get to essentially create a deal with the assurance that a Virginia court will not decide that it could have created a better one.  You can  sleep well with the certainty that the rules of the game will not change months (or years) after the project is complete.

In short, if you, as a construction professional in Virginia, carefully draft your contracts and work with a construction attorney to assure that you at least know what the parameters of the deal are, you can do very well.  Don’t be scared by contracts, just be careful.

UPDATE:  Here is a great analysis of Virginia and the 6th Circuit Court of Appeals by @matthewdevries at his blog.

As always, I welcome and encourage your comments below, please share your thoughts.  Also, please subscribe to keep up with the latest Construction Law Musings.

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35 Responses to Affirmed: The Contract is King in Virginia
  1. uberVU - social comments
    March 1, 2010 | 10:24 AM

    Social comments and analytics for this post…

    This post was mentioned on Twitter by constructionlaw: New Musings: Affirmed: The Contract is King in Virginia http://bit.ly/dA4Bjm

  2. Timothy R. Hughes
    Twitter:
    March 1, 2010 | 2:44 PM

    Good points, and thanks for the reference to Heidi’s post as well.

    The interesting sub-thread is that it feels like perhaps that primacy of contracts in Virginia has been just a wee bit reduced … like maybe they are prince, not king? That may be more of an anecdotal reaction at the state trial court level, still king when federal or appellate courts are considered I guess.
    .-= Timothy R. Hughes´s last blog post ..Stimulus Funds, Dripping not Pouring, in Virginia?? =-.

  3. Christopher G. Hill
    Twitter:
    March 1, 2010 | 2:46 PM

    There are always judges who wish to read stuff into contracts. However, the Virginia Supreme Court seems to stick to the contract more often than not. For better or worse, many of the cases get settled so the appellate courts don’t get a crack at them. Thanks for the comment.
    .-= Christopher G. Hill´s last blog post ..Old and New Business Strategies to Weather the Construction Recession =-.

  4. AngieGutenson (Angie Gutenson)
    March 1, 2010 | 2:59 PM

    Twitter Comment


    Must read for all #construction tweeps via @constructionlaw: The Contract is King in Virginia [link to post] (re Granby Towers)

    Posted using Chat Catcher

  5. Melissa Brumback
    Twitter:
    March 1, 2010 | 5:32 PM

    Interesting. In North Carolina, “pay when paid” clauses are void by statute as against public policy.

  6. Christopher G. Hill
    Twitter:
    March 1, 2010 | 5:46 PM

    Not in our fair Commonwealth. A lot of states have such statutes, but here in VA, they are enforceable if carefully drafted.
    .-= Christopher G. Hill´s last blog post ..Economic Loss Rule not Absolute in Construction =-.

  7. [...] the original post:  Affirmed: The Contract is King in Virginia | Construction Law … tags: battle, being-pulled, contract-dispute, drinking-before, dui, federal-court, [...]

  8. [...] that all of the details are hammered out up front in the contract documents.  In Virginia, the contract is king and (absent some clearly illegal provision) the contract will be enforced as written.  Many [...]

  9. Heidi Meinzer
    March 16, 2010 | 11:14 AM

    Chris,

    Thanks so much for the shout out! Sorry I didn’t leave a comment earlier. I do appreciate bouncing ideas off of you and getting your perspective. It is most interesting to see how other folks view Virginia’s way of seeing the contract as king. If you know what you’re doing, get advice before you sign the contract, and are up front with the other side about potential sticky issues, Virginia’s way of dealing with contracts can really be the way to go! Take care and enjoy the oncoming Spring!

    Heidi

  10. Christopher G. Hill
    Twitter:
    March 16, 2010 | 11:16 AM

    Thanks Heidi. I appreciate being able to play off of you guys up there in NOVA.
    .-= Christopher G. Hill´s last blog post ..Run a Job Smoothly- And Turn a Profit Doing It =-.

  11. [...] in which “pay when paid” clauses are enforceable.  In some states, such as Virginia, the contract is king and whatever the contract says will be enforced.  Such clauses are also generally enforceable in a [...]

  12. [...] get it right the first time.” Conversely, failure to set forth expectations in a state where the contract is king can lead to disaster.  Without a well drafted written contract the parties are at the mercy of the [...]

  13. [...] in fact shifted all of the risk downhill in the manner described above.  We are in Virginia where the contract is king so I’m not sure that such a clause, correctly drafted, would not be enforced. Fairness would [...]

  14. [...] the same strict construction to the notice statute that it applies to mechanic’s liens and contracts.  Aside from the takeaways listed in the great post by @timrhughes at the Virginia Real Estate, [...]

  15. [...] Here at Musings, I sometimes feel as if I am beating the “contract is king” drum to death.  However, each time I start to get this feeling, a new case out of either [...]

  16. [...] (If you find a lawyer who doesn’t talk about this, find yourself another lawyer).  As both Chris and I have written about previously, the contract is the king.  It controls everything about your [...]

  17. [...] is yet another instance of the contract controlling the analysis.  While the result may seem a bit silly in light of the fact that the clogged drain was the reason [...]

  18. Plain Meaning Can Be a Bear
    June 29, 2011 | 8:00 AM

    [...] is yet another instance of the contract controlling the analysis.  While the result may seem a bit silly in light of the fact that the clogged drain was the [...]

  19. [...] “Little Miller Act” claims, but for registration of businesses, occupational safety, construction contract claims, and other state law specific [...]

  20. [...] that the streamlining effect for which arbitration was created actually occurs.  Because the contract is king in Virginia, these provisions can essentially create the rule of civil procedure used to resolve [...]

  21. [...] to argue in a vacuum and from circumstances instead of from a contract that a Virginia Court would enforce to the letter.  I see cases like these on a daily basis, and not all of them are salvageable.  In any event [...]

  22. [...] to argue in a vacuum and from circumstances instead of from a contract that a Virginia Court would enforce to the letter.  I see cases like these on a daily basis, and not all of them are salvageable.  In any event [...]

  23. [...] have discussed on several occasions the fact that construction contracts matter.  The words in them matter and, in Virginia (as well as other states), most provisions, if not all [...]

  24. [...] of Thyssenkrupp’s claim.  The Court, as Virginia state and federal courts are want to do, looked at the plain language of the agreement and tossed this seemingly logical and practical issue [...]

  25. [...] statutes and regulations governing its business.  Couple this with the fact that most of the time contracts in Virginia are enforced as written (see the need for written change orders outlined in the prior post) and you have one very lucky [...]

  26. [...] written ones) are near and dear to my heart here at Construction Law Musings.  In a world where the contract is king, having a written construction agreement is a key component of any properly run construction [...]

  27. [...] at Musings, the contract is king and most of the time, the Virginia state and federal courts will not imply a right of action from a [...]

  28. Jeremy Olm
    August 30, 2013 | 3:23 AM

    I think Virginia has the right idea; a contract should be very specific, particularly in the area of construction as there are so many aspects that can go wrong. It’s the only way a working relationship can be truly fair. As long as both parties read the document before signing it and are fully aware of its conditions, they then have no right to dispute it should something happen. The construction industry can be a complicated area, so contracts have to be very clear and clarify every point. My advice is to get an agent who specialises in construction law and have them look through the contract before signing anything.

  29. […] course, in the Commonwealth of Virginia where I practice law the contract is king and public policy generally has no bearing on the “deal” laid out in a contract.  In […]

  30. […] in Virginia, like in Indiana, the contractual language is key to any analysis of this issue.  As I have said here at Musings almost ad nauseum, the contract […]

  31. […] in Virginia, like in Indiana, the contractual language is key to any analysis of this issue. As I have said here at Musings almost ad nauseum, the contract under […]

  32. […] usual very literal and strict reading of contractual terms (remember this is the appeals court that affirmed that the contract is king), followed the letter of the contract and affirmed the assessment of liquidated damages despite the […]

  33. […] usual very literal and strict reading of contractual terms (remember this is the appeals court that affirmed that the contract is king), followed the letter of the contract and affirmed the assessment of liquidated damages despite the […]

  34. […] the contract is king in Virginia, in most circumstances the terms of the bond will not be “trumped” by any other […]

  35. […] the construction “food chain” and that works in the Commonwealth of Virginia where the contract is king, I see the logic and legal reasoning behind such a decision.  Frankly, from a legal perspective, […]

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About Musings

I am a construction lawyer in Richmond, Virginia, a LEED AP, and have been nominated by my peers to Virginia's Legal Elite in Construction Law on multiple occasions. I provide advice and assistance with mechanic's liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals.

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