Sunday, July 15, 2012

Final Acceptance of Work on a Construction Project - Implications - Part 2 of 5

Contracts often define how final acceptance will occur, but that is not always the case. In federal government contracts, the contracting officer will often issue a letter formally “accepting” the work, or designated portions thereof. On the other hand, some form contracts avoid using the term “final acceptance” in favor of discussing the conditions the contractor must satisfy to obtain the release of “final payment.” For example, the Consensus DOCS standard “General Conditions” state that when “Final Completion” has been achieved, the contractor may invoice for its “Final Payment.”
Even though contracts may avoid using “final acceptance” language, the law will always recognize that at some point in the closeout process, the owner “accepts” the work as performed and the risk of loss passes to the owner. While the precise moment of “final acceptance” cannot always be determined, contractors should nevertheless be aware of the significance of this contract milestone and the restrictions it places on the owner’s right to subsequently require corrections to the work.

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