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Pietrangelo Cook attorney suggests careful contract drafting for homebuilders

Pietrangelo Cook attorneys talked with a group of Memphis-area home builders Tuesday about the risks inherent in many home construction contracts.  In particular, we explained how a recent Tennessee Supreme Court decision creates broader legal exposure for general contractors and suggested ways they might mitigate their risk when negotiating with homeowners.

The event was a contract law seminar organized by and for members of the Memphis Area Home Builders Association (MAHBA).

The recent decision, Federal Insurance Company v. Winters, 354 S.W.3d 287 (Tenn. Oct. 2011), has garnered much attention for its holding, that general contractors cannot delegate their “duty to perform work carefully, skillfully, diligently and in a workmanlike manner” to subcontractors.  It means owners are not limited in their recourse to negligent subcontractors, and can now go after their general contractors too, even if the general played no role in causing the damage.

PC attorneys suggested homebuilders compose their contracts with a mind toward the Federal Insurance case and offered drafting suggestions that may limit some of that exposure.  We also shared lessons from a recent victory in a dispute between a prominent local builder and a wealthy homeowner.

In that case, the owner stopped all payment to the builder mid-project unless the builder agreed to change the standards of construction and finish the job under the supervision of a commercial architect.  The dispute went to arbitration and the builder prevailed.

We shared the disputed contract provisions and explained how more careful drafting might have better served to deflate the dispute before informal resolution between the parties became impossible.


For more information contact:
Anthony C. Pietrangelo
PH: 901-685-2662
FX: 901-685-6122