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Monthly Archives: January 2016

Pursuit of Opportunity: Bidding

Both contractors and owners understand how important the bidding process is. What is at stake is obvious: contractors know that if the bid is too high and not accepted, the work will go to someone else. If the bid is too low, the contractor may lose money. Owners know that if the accepted bid is unrealistically low, the bidder may not be able to fulfill the obligations of the contract.

The bidding process is expected to protect the owner from unjustified high prices through a competition between equally knowledgeable and capable bidders. However, it doesn’t always work that way.

Most of the legal issues relating to the bidding process arise from the tactics that owners and contractors use to avoid the consequences of their mistakes.

The starting point of legal analysis is the principle that a deal is a deal. A party in a contract is normally held to perform the contract once the deal is made, even at a loss. Either or both sides may recognize early in the process that a mistake has been made, and that problems are going to be inevitable. Sometimes a contractor misinterpreted the design documents or underestimated the quantities of materials required, or based a bid on a non-binding estimate by subcontractors or suppliers who change position after the contractor is committed. From the owner’s perspective, these are not good reasons to allow more time or money to the contractor.

It is not usually clear where the mistake came from. It seems that there are usually several mistakes, including the failure to review and catch the mistake before the deal is made. The law recognizes the reality that several mistakes may converge together and produce a damaging event or occurrence. Therefore, there might be responsibility on both sides. This provides good reasons for all sides to be flexible in resolving the problems.

The first action of a legal counsel should be to guide the client to an objective evaluation of what has happened. There may not have been a mistake, or the mistake may be someone else’s fault, but the first task is always to understand what really happened. Remember that the individual who made the mistake could have difficulty in recognizing the mistake. Only after this, can you evaluate all options with the goal of performing all obligations, mitigating possible losses, and preserving relationships if possible.

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Preserving And Organizing Documents: Spoliation

Technological advances have irrevocably changed the way we communicate and record and maintain important documents. More and more, the use of email, texting, computer-assisted accounting, and electronic word processing create electronic documents. Because electronic documents are easy to create and are so useful, more documents and communications are created and maintained than ever before. However, electronic documents are also easy to alter or destroy. Many businesses routinely sweep company computers and email, inadvertently destroying evidence that is crucial to both sides in resolving disputes.

Withholding, altering, hiding, or destroying evidence that is discoverable in a civil lawsuit or arbitration proceeding is termed spoliation. Spoliation does not depend on proof that you intended to destroy evidence. Spoliation can occur due to negligence or a mistake. A finding of spoliation can be disastrous in a lawsuit because a judge or arbitrator may punish the “spoliator: with sanctions, fines, or even default in a serious case.

The moment you realize that you may be sued, or arbitration may be demanded, you must act proactively to preserve all documents related to the claim. This includes all data recorded on computers and cellular devices. New developments in electronic documentation management make this task manageable, but those procedures must be implemented. All of the potential parties have the same responsibility to identify and preserve all documents and emails that may be relevant to the dispute.

Your adversary will claim that any deletion of electronic files after you knew a lawsuit might be filed was intentional and wrongful. The judge in your case may agree. In addition to sanctions, the judge may instruct the jury that they should presume that the altered and deleted documents were harmful to your case and would have proven your adversary’s case. If you think you may have deleted any electronic data that might be relevant to the case, you need to contact an attorney to fully understand the consequences and prepare your defense.

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