MISSISSIPPI CONSTRUCTION LAW
TABLE OF CONTENTS
 

MISSISSIPPI CONSTRUCTION LAW TABLE OF CONTENTS ABOUT THE AUTHORS ................................................................................i
ACKNOWLEDGMENTS ................................................................................ii
PREFACE ................................................................................iii

CHAPTER ONE LICENSING ................................................................................1
1. INTRODUCTION ................................................................................1
1.1. OBTAINING A CERTIFICATE OF RESPONSIBILITY ................................................................................2
1.2. EXEMPTIONS ................................................................................4
1.3. PENALTIES FOR NONCOMPLIANCE ................................................................................5
1.3.1. Failure to Obtain a Certificate ................................................................................5
1.3.2. Failure to Provide Notice of Certificate ................................................................................8
1.3.3. Failure To Obtain Residential License ................................................................................9
1.4. RESIDENT CONTRACTOR PREFERENCE ................................................................................9
1.5. USE OF RESIDENT LABOR ON PUBLIC WORKS ................................................................................9
1.6. CONCLUSION ................................................................................10

CHAPTER TWO BIDDING ................................................................................13
2. INTRODUCTION ................................................................................13
2.1. COMPETITIVE BIDDING ................................................................................14
2.1.1. Private Projects ................................................................................14
2.1.2. Public Projects ................................................................................14
2.1.2.1. Construction ................................................................................15
2.1.2.2. Bid solicitation ................................................................................15
2.1.2.3. Bid selection ................................................................................17
2.1.2.3.1. Timeliness of bid ................................................................................19
2.1.2.3.2. Adequacy of bid ................................................................................20
2.1.2.3.3. Subcontractor listing ................................................................................20
2.1.2.3.3.1. IFB requirements ................................................................................20
2.1.2.3.3.2. Listed subcontractor’s rights ................................................................................21
2.1.2.3.4. Unbalanced Bid ................................................................................21
2.1.2.4. Leasing ................................................................................22
2.1.2.5. Public Procurement Code ................................................................................24
2.2. BID ERRORS ................................................................................24
2.2.1. Enforceability of Bids ................................................................................24
2.2.1.1. Contractor’s bid ................................................................................24
2.2.1.2. Subcontractor quotations ................................................................................25
2.2.1.3. Supplier quotations ................................................................................25
2.2.2. Bid Mistakes ................................................................................26
2.2.2.1. Mistake of fact ................................................................................27
2.2.2.2. Mistake of judgment ................................................................................27
2.2.2.3. Mistake of law ................................................................................28
2.2.3. Relief from Bid Mistakes ................................................................................29
2.2.3.1. Bid withdrawal ................................................................................32
2.2.3.2. Bid correction ................................................................................36
2.2.4. Post-Award Relief ................................................................................38
2.3. BID PROTESTS ................................................................................39
2.3.1. Where to Protest ................................................................................42
2.3.1.1. State Agency ................................................................................42
2.3.1.2. Governing Authority ................................................................................42
2.3.2. When to Protest ................................................................................46
2.3.3. What to Protest ................................................................................47
2.3.3.1. Certificate of responsibility number ................................................................................47
2.3.3.2. Late bids ................................................................................49
2.3.3.3. Bid responsiveness ................................................................................49
2.3.3.4. Faulty solicitation ................................................................................51
2.3.3.4.1. Experience requirements ................................................................................51
2.3.3.4.2. Unduly restrictive of competition ................................................................................51
2.3.3.4.3. Brand name “or equal” ................................................................................53
2.3.3.4.4. Proprietary, patented items ................................................................................54
2.3.3.4.5. Single base bidding ................................................................................55
2.3.3.4.6. Excessive bond requirements ................................................................................55
2.4. CONTRACT AWARD ................................................................................55
2.4.1. Public Projects ................................................................................55
2.4.2. Minority Business ................................................................................56
2.4.3. Private Projects ................................................................................56
2.5. DISCLOSURE OF BID INFORMATION ................................................................................57
2.6. CONCLUSION ................................................................................57

CHAPTER THREE THE ARCHITECT/ENGINEER ................................................................................65
3. INTRODUCTION ................................................................................65
3.1. STATE LAWS GOVERNING THE PRACTICE OF ARCHITECTURE AND ENGINEERING ................................................................................66
3.1.1. Statutory Regulation of Architects ................................................................................66
3.1.2. Statutory Regulation of Engineers ................................................................................71
3.1.3. Associations of Architects and/or Engineers ................................................................................74
3.1.3.1. Architectural/Engineering Firms ................................................................................74
3.1.3.2. Architectural Firms ................................................................................75
3.1.3.3. Engineering Firms ................................................................................76
3.2. OWNER-A/E AGREEMENT ................................................................................77
3.2.1. Types of Agreements ................................................................................78
3.2.2. Limitation on Services ................................................................................80
3.2.3. Additional Services ................................................................................81
3.3. ARCHITECT-CONSULTANT AGREEMENTS ................................................................................81
3.4. THE A/E’S RESPONSIBILITIES ................................................................................82
3.4.1. Design ................................................................................82
3.4.2. Bidding and Negotiation ................................................................................83
3.4.3. Construction ................................................................................84
3.4.3.1. Construction progress schedule ................................................................................88
3.4.3.2. “Or equal” or substitution submittals ................................................................................89
3.4.3.3. Review and approval of shop drawings, product data and samples ................................................................................89
3.4.3.4. Effect of architect’s review and approval ................................................................................96
3.4.3.5. Architect’s shop drawing review/approval liability ................................................................................97
3.4.3.6. Delayed submittal review/approval liability ................................................................................99
3.4.3.7. Site Visits ................................................................................100
3.4.4. Closing the Project ................................................................................114
3.4.4.1. Substantial completion ................................................................................114
3.4.4.2. Punch Lists ................................................................................116
3.4.4.3. Final Payment ................................................................................117
3.4.4.4. Warranties ................................................................................120
3.4.4.5. As-Builts ................................................................................120
3.4.4.6. Year-End Inspection ................................................................................122
3.5. THE A/E’S LIABILITY ................................................................................123
3.5.1. Liability to the Owner ................................................................................123
3.5.1.1. Exceeding Project Cost Limitations or Estimates ................................................................................126
3.5.1.2. Design Omissions ................................................................................127
3.5.1.3. Inadequate Plans and Specifications ................................................................................129
3.5.1.4. Inadequate Observation of the Work ................................................................................130
3.5.1.5. Erroneous Certification of Payment ................................................................................133
3.5.1.6. Erroneous Approval of Contractor’s Shop drawings and Submittals ................................................................................135
3.5.2. Liability to the Contractor ................................................................................135
3.5.2.1. Inadequate Plans and Specifications ................................................................................136
3.5.2.2. Negligent Construction Administration ................................................................................137
3.5.2.3. Economic Loss Doctrine ................................................................................140
3.5.3. Liability to Subcontractors ................................................................................140
3.5.4. Liability to Workers and Visitors ................................................................................142
3.5.5. Liability to Users ................................................................................147
3.5.6. Liability to the Surety ................................................................................148
3.5.7. Liability to Adjacent Landowners ................................................................................149
3.5.8. Liability for Willful Misconduct ................................................................................149
3.5.9. Liability to insureds ................................................................................150
3.5.10. Limitation of Liability Clauses ................................................................................150
3.6. PROFESSIONAL LIABILITY INSURANCE ................................................................................152
3.7. CONCLUSION ................................................................................153

CHAPTER FOUR THE OWNER ................................................................................163
4. INTRODUCTION ................................................................................163
4.1. ADMINISTRATIVE RELIEF VS. BREACH OF CONTRACT ................................................................................164
4.2. WARRANTY OF PLANS AND SPECIFICATIONS ................................................................................165
4.3. CONTRACT INTERPRETATION ................................................................................167
4.4. DUTY NOT TO DELAY, HINDER OR INTERFERE WITH THE CONTRACTOR’S PERFORMANCE ................................................................................173
4.4.1. Owner’s Expressed Duty Not To Delay ................................................................................173
4.4.2. Owner’s Implied Duty Not To Delay ................................................................................174
4.4.3. Specific Types of Owner-Caused Delays ................................................................................174
4.4.3.1. Untimely issuance of notice to proceed ................................................................................174
4.4.3.2. Failure to make the project site available ................................................................................176
4.4.3.3. Owner’s interference with contractor’s work sequence ................................................................................176
4.4.3.4. Owner’s delay in acting on shop drawings and submittals ................................................................................177
4.4.3.5. Owner’s delay in design review ................................................................................177
4.4.3.6. Owner’s delay in supply or removal of materials ................................................................................178
4.4.3.7. Owner’s issuance of unreasonable or improper stop order ................................................................................178
4.4.3.8. Owner’s excessive inspection and unreasonable performance demands ................................................................................178
4.4.3.9. Owner’s delay in issuing change orders ................................................................................180
4.4.3.10. Owner’s failure to make progress payments ................................................................................180
4.5. OWNER’S MATERIAL CHANGE IN THE CONTRACT ................................................................................180
4.6. CONCLUSION ................................................................................180

CHAPTER FIVE THE CONTRACTOR ................................................................................187
5. INTRODUCTION ................................................................................187
5.1. BIDDING ................................................................................188
5.1.1. Site Investigation ................................................................................188
5.2. THE CONSTRUCTION CONTRACT ................................................................................190
5.2.1. Integration Clause ................................................................................191
5.2.2. Site Visit ................................................................................191
5.2.3. Order of Precedence Clause ................................................................................191
5.2.4. Permits and Fees ................................................................................192
5.2.5. Owner’s Right to Carry Out the Work ................................................................................193
5.2.6. Review of Contract Documents and Field Conditions by Contractor ................................................................................194
5.2.7. Compliance with Codes and Ordinances ................................................................................194
5.2.8. Contractor’s Construction Schedule ................................................................................194
5.2.9. Shop Drawings, Product Data and Samples ................................................................................197
5.2.10. Aesthetic Determination ................................................................................199
5.2.11. Claims and Disputes ................................................................................201
5.2.12. Differing Site Conditions ................................................................................201
5.2.13. Changes in the Work ................................................................................201
5.2.14. Time ................................................................................201
5.2.15. Payments ................................................................................202
5.2.15.1. Schedule of values ................................................................................202
5.2.15.2. Progress payments ................................................................................202
5.2.15.3. Punchlist ................................................................................203
5.2.15.4. Retainage ................................................................................204
5.2.15.5. Final payment ................................................................................204
5.2.16. Insurance ................................................................................205
5.2.16.1. Property insurance ................................................................................205
5.2.16.2. Loss of use insurance ................................................................................207
5.2.16.3. Comprehensive general liability coverage ................................................................................207
5.2.17. Statute of Limitations / Repose ................................................................................211
5.2.18. Termination ................................................................................214
5.2.18.1. Termination by contractor ................................................................................215
5.2.18.2. Termination by owner ................................................................................216
5.2.19. Attorney’s Fees and Interest ................................................................................218
5.2.20. Worker’s Compensation Immunity ................................................................................218
5.3. WALK AWAY CLAUSES ................................................................................218
5.4. TAXES ON CONSTRUCTION ................................................................................219

CHAPTER SIX THE SUBCONTRACTOR ................................................................................225
6. INTRODUCTION ................................................................................225
6.1. BIDDING ................................................................................227
6.2. SUBCONTRACTING ................................................................................227
6.2.1. Scope of Work ................................................................................228
6.2.2. Time ................................................................................229
6.2.3. Payment ................................................................................229
6.2.3.1. “Pay when paid” clauses ................................................................................229
6.2.3.2. Prompt payment requirements ................................................................................232
6.2.4. Contractor’s Warranty of Plans and Specifications ................................................................................233
6.2.5. Contractor’s Duty not to Hinder, Delay or Interfere ................................................................................234
6.2.6. Assignment of Subcontract ................................................................................239
6.2.7. Arbitration ................................................................................240
6.2.8. Subcontractor Claims and Disputes ................................................................................240
6.2.9. Subcontract Changes ................................................................................241
6.2.10. Hold Harmless and Indemnity Clauses ................................................................................241
6.2.11. Insurance ................................................................................243
6.2.12. Subcontractor’s Liability to Contractor ................................................................................243
6.2.13. Termination ................................................................................243
6.2.14. Attorney’s Fees and Interest ................................................................................244
6.3. CONCLUSION ................................................................................244

CHAPTER SEVEN CHANGES IN THE WORK ................................................................................251
7. INTRODUCTION ................................................................................251
7.1. CHANGES - WRITTEN VS. ORAL ................................................................................252
7.1.1. Public Construction Projects ................................................................................254
7.1.1.1. Written Change Directive ................................................................................254
7.1.1.2. Oral change directive ................................................................................256
7.1.2. Private Construction Projects ................................................................................258
7.1.2.1. Subsequent conduct ................................................................................259
7.1.2.2. Breach of contract ................................................................................260
7.1.2.3. Implied Consent ................................................................................261
7.2. CHANGES CLAUSE - HOW DO THEY WORK? ................................................................................261
7.2.1. Agreed Changes ................................................................................262
7.2.2. Construction Change Directive ................................................................................262
7.2.3. Minor Changes ................................................................................266
7.3. WHO HAS AUTHORITY TO ORDER A CHANGE? ................................................................................268
7.4. CONSTRUCTIVE CHANGE ................................................................................270
7.5. CARDINAL CHANGES ................................................................................272
7.6. DEDUCTIVE CHANGES ................................................................................274
7.7. NOTICE ................................................................................275
7.8. CONCLUSION ................................................................................276

CHAPTER EIGHT DIFFERING SITE CONDITIONS ................................................................................281
8. INTRODUCTION ................................................................................281
8.1.1. Duty to Investigate Site ................................................................................285
8.1.2. Duty to Disclose ................................................................................287
8.1.3. Disclaimers ................................................................................287
8.2. NOTICE ................................................................................288
8.3. CONTRACTUAL REMEDIES ................................................................................289
8.3.1. Type 1 Conditions ................................................................................290
8.3.2. Type 2 Conditions ................................................................................291
8.4. CHANGED CONDITIONS NOT COVERED BY THE “CHANGED CONDITIONS” CLAUSE ................................................................................292
8.4.1. Acts of God ................................................................................292
8.4.2. Acts of Sovereign ................................................................................293
8.4.3. Conditions Subsequent to Contract ................................................................................293
8.4.4. Mississippi Law ................................................................................294
8.4.5. Compensation ................................................................................295
8.5. CONCLUSION ................................................................................296

CHAPTER NINE DAMAGES AND DELAYS ................................................................................299
9. INTRODUCTION ................................................................................299
9.1. THE OWNER’S DAMAGES ................................................................................300
9.1.1. Contractor’s Defective or Incomplete Performance ................................................................................300
9.1.1.1. Insubstantial Performance ................................................................................302
9.1.1.2. Substantial Performance ................................................................................303
9.1.2. Contractor’s Late Completion ................................................................................304
9.1.2.1. Liquidated damages ................................................................................304
9.1.2.2. Actual damages ................................................................................308
9.1.3. Emotional Distress ................................................................................308
9.2. THE CONTRACTOR’S DAMAGES ................................................................................309
9.2.1. Late Payment Damage ................................................................................309
9.2.2. Termination Damages ................................................................................309
9.2.3. Delay Damages ................................................................................309
9.2.3.1. Owner-caused/compensable Delays ................................................................................310
9.2.3.1.1. Direct job costs ................................................................................311
9.2.3.1.2. Home office overhead costs ................................................................................313
9.2.3.1.3. Inefficiency costs ................................................................................316
9.2.3.1.4. Lost profits ................................................................................319
9.2.3.2. Excusable/compensable Delays ................................................................................322
9.2.3.3. Excusable/non-compensable Delays ................................................................................322
9.2.3.4. Contractor-caused Delays ................................................................................324
9.2.3.5. Concurrent Delays ................................................................................324
9.2.4. Reasonable Value of Services ................................................................................325
9.3. “NO DAMAGE FOR DELAY” CLAUSE ................................................................................326
9.4. PREJUDGMENT INTEREST ................................................................................328
9.5. ATTORNEYS FEES ................................................................................329
9.6. MITIGATION OF DAMAGES ................................................................................332
9.7. PUNITIVE DAMAGES ................................................................................333
9.8. WRONGFUL DEATH ACT ................................................................................333
9.9. CONCLUSION ................................................................................335

CHAPTER TEN BONDS AND LIENS ................................................................................345
10. INTRODUCTION ................................................................................345
10.1. BONDS ................................................................................346
10.1.1. Federal Construction Bond ................................................................................346
10.1.1.1. Notice requirements ................................................................................347
10.1.1.2. Labor or material furnished in the prosecution of the work ................................................................................348
10.1.1.2.1. Labor ................................................................................348
10.1.1.2.2. Material ................................................................................348
10.1.1.2.3. Equipment ................................................................................349
10.1.1.2.4. Furnished in the prosecution of the work ................................................................................349
10.1.1.3. Interest and attorneys’ fees ................................................................................350
10.1.1.4. Delay costs ................................................................................352
10.1.1.5. Subcontractor vs. supplier ................................................................................352
10.1.1.6. Date of last supply of labor or material ................................................................................354
10.1.2. Mississippi Public Works Construction Bond ................................................................................354
10.1.2.1. Labor and material ................................................................................357
10.1.2.2. Delay costs ................................................................................358
10.1.2.3. Attorney’s fees ................................................................................358
10.1.3. Mississippi’s Highway Construction Bond ................................................................................358
10.1.3.1. Claimants covered ................................................................................359
10.1.3.2. Labor and material ................................................................................359
10.1.3.3. Notice ................................................................................359
10.1.4. Mississippi’s Private Works Construction Bond ................................................................................360
10.1.4.1. Labor and material ................................................................................362
10.1.4.2. Profit and overhead ................................................................................362
10.1.4.3. Attorneys’ fees and interest ................................................................................362
10.1.5. Obligations of Surety ................................................................................362
10.2. LIENS ................................................................................363
10.2.1. Who May Claim: ................................................................................364
10.2.2. Required Notice and Timing: ................................................................................364
10.2.3. Lien Filing: ................................................................................365
10.2.4. Suit Filing: ................................................................................365
10.2.5. Contractual Waivers: ................................................................................366
10.2.6. Waivers After Commencement of Work: ................................................................................366
10.3. CONCLUSION ................................................................................366

CHAPTER ELEVEN EFFECTIVE COLLECTION TECHNIQUES ................................................................................373
11. INTRODUCTION ................................................................................373
11.1. COLLECTION STEPS ................................................................................373
11.1.1. Carefully Select your Customer ................................................................................373
11.1.2. Obtain Project Documentation ................................................................................374
11.1.3. Properly Prepare the Schedule of Values ................................................................................375
11.1.4. Promptly Apply for Payment ................................................................................375
11.1.5. Demand Payment When Due ................................................................................375
11.1.6. Repeatedly Demand Payment when Past Due ................................................................................375
11.1.7. Stop Work ................................................................................375
11.1.8. Demand Adequate Assurance ................................................................................376
11.1.9. Contact an Attorney ................................................................................377
11.1.10. File Suit ................................................................................377
11.1.10.1. Federal court ................................................................................377
11.1.10.2. State court ................................................................................378
11.1.10.2.1. Justice court ................................................................................378
11.1.10.2.2. County court ................................................................................378
11.2. OPEN ACCOUNT CLAIMS ................................................................................379
11.3. BAD CHECK CLAIMS ................................................................................380
11.4. COLLECTION ASSISTANCE ................................................................................381
11.5. BANKRUPTCY CLAIMS ................................................................................382
11.5.1. Bonded Work ................................................................................382
11.5.2. Projects Where Money is Held by the Owner at the Time of Bankruptcy ................................................................................383
11.5.3. Executory Contracts ................................................................................384
11.5.4. Assistance of an Attorney ................................................................................385
11.6. CONCLUSION ................................................................................385

CHAPTER TWELVE ARBITRATION, LITIGATION, OTHER FORMS OF ALTERNATIVE DISPUTES RESOLUTION AND SETTLEMENT ................................................................................389
12. INTRODUCTION ................................................................................389
12.1. ARBITRATION ................................................................................390
12.1.1. Arbitration Realities ................................................................................392
12.1.1.1. Electing to Arbitrate ................................................................................392
12.1.1.2. Mississippi Laws Governing Arbitration ................................................................................392
12.1.1.2.1. Initiation ................................................................................394
12.1.1.2.2. Waiver ................................................................................395
12.1.1.2.3. Appointment of Arbitrator(s) ................................................................................395
12.1.1.2.4. Venue ................................................................................396
12.1.1.2.5. Discovery ................................................................................397
12.1.1.2.6. Hearing ................................................................................397
12.1.1.2.7. Award ................................................................................399
12.1.1.2.8. Reconsideration ................................................................................400
12.1.1.2.9. Court Review of Award ................................................................................401
12.1.1.3. Modifying or Correcting an Award ................................................................................402
12.1.1.4. Vacating an Award ................................................................................403
12.1.1.5. Judgment ................................................................................404
12.1.1.6. Appeal ................................................................................404
12.2. LITIGATION ................................................................................405
12.2.1. Pleadings ................................................................................405
12.2.2. Discovery ................................................................................406
12.2.3. Trial ................................................................................407
12.2.4. Appeals ................................................................................408
12.3. OTHER ALTERNATIVE DISPUTES RESOLUTION METHODS ................................................................................409
12.3.1. Mediation ................................................................................409
12.3.2. Mini-Trials ................................................................................411
12.3.3. Summary Jury Trials ................................................................................411
12.4. SETTLEMENT ................................................................................412
12.5. CONCLUSION ................................................................................412