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May 2013 Archives

Horizontal Exhaustion: Continuing Efforts to Protect an Owner/Developer

Prudent Owner/Developers should continually review their approach to risk management. In particular, changes to the always-evolving construction insurance coverage forms require Owner/Developers to rely more than ever on their insurance brokers to obtain the broadest form of coverage available in the marketplace. One construction insurance coverage issue that often falls through the cracks is commonly referred to as "horizontal exhaustion." Horizontal exhaustion, which has been endorsed by New York courts, requires that in the event of a claim, primary liability coverage available to each impacted trade contractor(s), construction manager, and perhaps, the Owner's primary layer of general liability coverage, be exhausted before any excess or umbrella liability policy held by the impacted trade contractor(s) be subject to exposure.

A Legally Binding Carrot And Stick: Drafting Effective Liquidated Damages Clauses In Construction Contracts

Owners of construction projects are typically under pressure to meet stringent deadlines for project completion, whether motivated by a construction loan's looming deadlines, strict terms of a regulatory agreement, demanding lease and/or sales goals or a combination of the above. Accordingly, when an Owner negotiates its contract with the project's General Contractor ("GC"), establishing, maintaining and incentivizing the GC to abide by a strict construction schedule often tops the list of Owner's priorities.

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