In Contracts, One Word Makes All the Difference

Originally posted 2010-12-06 10:49:10.

Read Your Construction ContractsHere 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 the Virginia state courts or the Fourth Circuit Court of Appeals here in Richmond reminds me that we all, lawyers and contractors alike, need to be reminded of this fact on a regular basis.  The terms written into a construction contract (or any other contract for that matter) will control the outcome of any dispute in just about every case.

A recent 4th Circuit case takes this to the extreme in pointing out the the choice which of two tiny words can change the entire set of procedural rules and even the courthouse in which your dispute will be decided.  In FindWhere Holdings Inc. v. Systems Env. Optimization LLC, the Fourth Circuit looked at a forum selection clause found in a contract between the parties.  In this case, the clause stated that any dispute would be litigated in the courts “of the State of Virginia.”  When the defendants tried to remove the case from Virginia state court to the Eastern District of Virginia federal courts, the federal court remanded the case, sending it back to the Circuit Court of Loudoun County, Virginia.

On appeal of this ruling, the 4th Circuit agreed with the remand and contrasted the language found in the contract (i. e. “of the State of Virginia) with other standard language stating “in the State of Virginia.”  In upholding the district court, the 4th Circuit stated that the language containing the word of expressed sovereignty as opposed to the mere location expressed in the language using the word in.  In the first case, the 4th Circuit stated, the federal courts have no jurisdiction while in the second they do.  As such, the case could not continue in federal court.

While this case does not involve construction, it is informative for all of us in the construction world who deal with written contracts on a daily basis.  The Findwhere is a great reminder to read your construction documents carefully, and draft them with even more care.  The lesson of this case is that a change in just one two-letter word can completely change the whole direction of a construction contract dispute.  For this reason, the advice, early in the contracting process, of a qualified construction attorney knowledgeable in the way these little words make a difference is key.

As always, I welcome your comments below.  Please subscribe to keep up with this and other Construction Law Musings.

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27 Responses to In Contracts, One Word Makes All the Difference
  1. the aribra group LLC (@aribra)
    December 6, 2010 | 10:49 AM

    In Contracts, One Word Makes All the Difference: Here at Musings, I sometimes feel as if I am beating the “contr… http://bit.ly/ijQ10E

  2. Hardhat Blog (@hardhatblog)
    December 6, 2010 | 10:49 AM

    In Contracts, One Word Makes All the Difference http://bit.ly/gryYaw #constr #musings

  3. Build2Sustain (@build2sustain)
    December 6, 2010 | 10:49 AM

    In Contracts, One Word Makes All the Difference: Here at Musings, I sometimes feel as if I am beating the “contr… http://bit.ly/hvvk4j

  4. Philippe Stefano (@philippestefano)
    December 6, 2010 | 11:09 AM

    In #Contracts, One Word Makes All the Difference: Here at Musings, I… http://goo.gl/fb/aIOcK #contractmanagement

  5. John Tarley
    Twitter:
    December 7, 2010 | 6:21 AM

    Thanks for another heads-up, Chris. It’s a great reminder that with virtually every clause susceptible to being litigated, contract review and drafting must be even more precise.
    John Tarley recently posted..Know the potential issues when attorneys serve as HOA board membersMy Profile

  6. Christopher G. Hill
    Twitter:
    December 7, 2010 | 8:21 AM

    Thanks for checking in John. After this case, I’ll be checking my contract language to assure it says what I need it to.
    Christopher G. Hill recently posted..Thanks for the Legal Elite NominationMy Profile

  7. Traci Riccitello (@TraciRiccitello)
    December 7, 2010 | 8:39 AM

    In Contracts, One Word Makes All the Difference | Construction Law Musings http://t.co/63Rvp1l (via @22twts Interviewees Daily)

  8. @crystalpsmith
    December 9, 2010 | 11:37 AM

    In Contracts, One Word Makes All the Difference http://bit.ly/iawZL3

  9. [...] memory, e-mails, and specifically, the construction contract and change orders themselves, are key.  These documents, much more than what all know to have [...]

  10. [...] your contract is king here in the Commonwealth of Virginia and you need to consider every word carefully.  Failing to do so can lead to serious [...]

  11. [...] can distinguish itself from competitors (for instance green building) to protecting itself through careful contract drafting.  I continue to believe in these ways for contractors to keep profitable and afloat during these [...]

  12. Musings on Construction Claim Changes
    September 19, 2011 | 4:11 PM

    [...] can distinguish itself from competitors (for instance green building) to protecting itself through careful contract drafting.  I continue to believe in these ways for contractors to keep profitable and afloat during these [...]

  13. [...] your construction contract documents require written change orders.  In other words, you should make your contracts say what you want them to and then follow the provisions of those contracts. Of course, as soon as I preach from the highest [...]

  14. [...] your construction contract documents require written change orders.  In other words, you should make your contracts say what you want them to and then follow the provisions of those contracts. Of course, as soon as I preach from the highest [...]

  15. [...] little doubt as possible as to what is and (importantly) what is not included in the contract.  A well drafted contract is the first step in the necessary education and expectation setting process.  Your local [...]

  16. [...] The words in them matter and, in Virginia (as well as other states), most provisions, if not all will be enforced to the letter.  Recently, the Western District of Virginia federal court ruled in a way that reminded me of [...]

  17. [...] have happened if these provisions had not been properly followed, though I have the suspicion that the contract would have been followed and the acceleration claim denied.  In short, had SNC failed to follow the notice provisions, it [...]

  18. [...] business opportunity because of time spent in litigation), but through good business practices, strong contract drafting, and early advice from a solid advisory team (including as you might guess an experienced [...]

  19. [...] more than one occasion here at Construction Law Musings, I have discussed the necessity of a good construction contract.  Of course, even the best contracts require proper pleading in court if you want to enforce [...]

  20. […] post makes a wonderful point, particularly in my home state of Virginia where contracts are strictly enforced.  Just about every construction subcontract that I review for those clients that take my advice to […]

  21. […] as little doubt as possible as to what is and (importantly) what is not included in the contract. A well drafted contract is the first step in the necessary education and expectation setting process. Your local […]

  22. Sometimes Scope Of Work Isn’t Obvious
    October 23, 2013 | 6:23 PM

    […] the “law” that will govern your interaction on a construction project. In construction, every word of the contract will be read carefully in the event of a dispute. You need to know exactly what you are bargaining […]

  23. […] one of the, if not the, most important document on that job.  Each word will be given meaning and each word can make a big difference in the outcome (this is true even to the point of having a preemptive waiver of mechanic’s […]

  24. […] is one of the, if not the, most important document on that job. Each word will be given meaning and each word can make a big difference in the outcome (this is true even to the point of having a preemptive waiver of mechanic’s […]

  25. […] hopefully profitable project, all of the gut following and great communication will not help you if your contract is not up to snuff.  In the spirit of giving you a few basics things to look at, here’s my list of three basics […]

  26. […] hopefully profitable project, all of the gut following and great communication will not help you if your contract is not up to snuff. In the spirit of giving you a few basics things to look at, here’s my list of three basics […]

  27. […] The obvious first answer is simply the company or person that failed to pay you according to the contract between you and them.  This type of claim will be directly controlled by the (hopefully well drafted and clear) […]

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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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