February 2004

Precedents and contract provisions | Legal Ease

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Precedents and contract provisions

by Stephen M. Phillips
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Sometimes, court decisions are surprising. And because case law develops through reliance on precedent, one surprising case decision can lead to several more cases with similar outcomes and the establishment of a legal principle that may not have been intended.

Several recent decisions interpreting property damage insurance provisions in The American Institute of Architects (AIA) standard contract documents illustrate this point. Appellate courts in several states have ruled that a contractor whose actions caused property damage to a building was not liable for the loss because AIA contract documents provide that the owner's property insurance was contractually stipulated to pay for the loss and the parties agreed to waive claims against one another.

If such rulings are relied on by other states, the effect would be that owners' property damage insurers, rather than roofing contractors and their insurers, would be liable for interior property damages that occur during reroofing of buildings.

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