As COVID-19 continues to result in government shutdown orders, labor shortages, and increased lead times to acquire materials, project owners, contractors, and subcontractors may begin to make claims of “force majeure,” or may otherwise suspend or even terminate work. Often these notifications or directives can first happen over the phone --- a contractor tells an owner that there is a manpower shortage, or that they are held up by an inability to work on the project site because a local order prohibits work from continuing. Many contracts require written notice of any such delays within a set period of time, so diligent parties will follow up such phone calls with a formal letter or email, but that does not always happen. So what happens months later when a contractor or subcontractor submits a claim for schedule extension or additional compensation? An enterprising party might remember the “written notice” provision and take comfort in the fact the “oral notice” they received months before does not meet the requirements of the contract. After all, the contract says “written notice,” so oral notice will never suffice, right?
A recent Texas Court of Appeals decision says otherwise. In James Const. Group v. Westlake Chemical Corp., 594 S.W.3d 722 (Tex. App.—Houston [14th Dist.] 2019, pet. filed Apr. 7, 2020), the Houston Court of Appeals examined a written notice provision in the context of a construction contract for the first time in more than a century. Specifically, the contract in Westlake required that, prior to termination, Westlake provide James Construction with written notice of any “serious safety violations.” Id. at 731. After providing such notice, Westlake had the authority to take unrestricted possession of the work or portion terminated and then pay for its completion and charge such costs to James Construction. Id. The parties did not dispute that such written notice was an express condition precedent to Westlake’s rights to termination or to take unrestricted possession of the work. The parties further did not dispute that Westlake did not provide such written notice, but instead provided oral notices. At trial, the jury determined that the notices Westlake provided “substantially complied” with the contract’s notice provision. Id. at 740.
On appeal, the parties argued over whether substantial compliance was the right test, or whether the contract’s written notice provision, which was an express condition precedent, required strict compliance. Id. The court noted that this question had not been addressed by the Texas Supreme Court in more than 100 years, when the court held that “less than strict compliance with [a contract]’s certificate condition did not defeat the contractor’s right of recovery. Id. (citing Linch v. Paris Lumber & Gran Elev. Co., 80 Tex. 23 (Tex. 1891)). The Westlake court further acknowledged that other Texas courts had held that written notice requirements could be strictly enforced, but not in a construction context. Id. However, overall, the court...
