Q: We have a situation where we never signed a contract and now a dispute has developed. We do have a letter of intent that accompanied the contract, which was not signed. The work has been performed. The party we are in the dispute with wants to mediate the claim as required by the contract, but we want to proceed to court to collect the money as quickly as possible. Are we required to mediate as stated in the contract even though we did not sign the contract, but have a letter of intent to perform?

A: This is a fairly common situation. In many of today’s standard form contracts used throughout the industry, almost all contracts have a written requirement that the parties engage in some form of mediation or Alternative Dispute Resolution prior to filing a lawsuit. The failure to engage in the process is a precondition to filing a lawsuit and should the parties not engage in the process, one of the parties typically uses this as a defense to get the lawsuit dismissed as premature. Here, the letter of intent is not tantamount to a contract that includes the mediation clause. If the contract referred to was the only document that included the mediation clause and that contract was not signed, that mediation clause does not become part of the contract merely by virtue that it was accompanied by a letter of intent to enter into a contract. Mediation is a voluntary process and courts cannot force parties to mediate. Of course, the parties could always agree to mediate on their own while the lawsuit is pending.


Q: There is an obvious trend towards sustainable design and construction for new projects. This trend appears to be increasing, and more and more owners are demanding LEED certification or other ’green’ goals. What are some of the risks involved in the design of such work?

A: This is a broad question, however, when it comes to managing risk of any kind, there are several basic contract principles that you should follow. The number one principle is the ability to control the risk. In other words, do not agree to something in your contract, or in terms of taking on responsibility, for which you have no control over the outcome or in the execution of that responsibility.

Next, many of the anticipated legal risk in addition to breach of contract for failure to reach some certification or sustainability benchmark would be negligence. In addition, potential misrepresentation regarding the performance of a design or facility may give rise to a cause of action for misrepresentation, basically a material misstatement as to the performance or design.

Lastly, the designer has to be on the look out for revisions to building codes and statutes regarding green or sustainable design and construction. Often times, courts will consider the failure to meet a statute or building code standard as negligence per se, meaning if the design violates a particular standard or statute regarding green building or design, the professional is negligent as a matter of law. Currently, no uniformity exists between various green building standards, statutes, or local building codes. Therefore, even if a design firm believes it is meeting certain green criteria, a failure to comply with locally mandated green standards creates a risk of claims of negligence.


Q: What steps can our firm take to minimize our risk when involved with a green or sustainable design or building project?

A: The best way to manage your risk is to manage the end user’s expectations as to what a green design can and cannot accomplish. You can do this by use of clear definitions and performance standards in your contracts, by asking for disclosures, and by implementing a green risk management plan.

The green risk management plan should be comprehensive enough to encompass each stage of the development of the project: from design development through construction administration. Your plan should assist the end user in understanding the project goals using specialized consulting services if necessary. Your plan must be integrated so that each element is supported by the others on the design and construction team.

Another approach is to avoid characterization of the structure as green and instead provide an inventory of the sustainable components and products used in the design and construction, including performance information from the manufacturers (as opposed to the designer). The more subjective and undefined qualities the structure are, the more risk is created for the designer or builder. From a design quality perspective, the firm with less experience implementing sustainable designs may want to engage in a peer review of their plans and specifications.

In light of the trend toward green and sustainable design and construction, it would behoove all professionals to reexamine their contracts and determine if they have the requisite specificity, disclaimers, and risk mitigation provisions to avoid liability as we move towards green and sustainable design and construction norms.