In the recent case of Dean Management, Inc. v. TBS Construction, Inc., the court held that a notice sent by facsimile transmission constituted “written notice” under the terms of a construction contract.
Dean Management, Inc. (“Dean”) was engaged in the business of general contracting and construction. Dean entered into a construction contract with TBS Construction, Inc. (“TBS”) to provide excavation services and installation of concrete at Dean’s Lion’s Choice Restaurant project (“Restaurant”) in Warrenville, Illinois. Among other things, the construction contract provided:
In the event (Dean) has to take over (TBS’s) job and terminate the Contract, said (Dean) shall give a twenty-four (24) hours (sic) written notice prior to it’s (sic) taking over the job.
After TBS began working on the Restaurant, representatives of the electrical workers union began picketing the job site because Dean employed a non-union electrical subcontractor. As a result of the picketing, TBS removed its equipment and employees from the job site and refused to continue to perform the work required by the construction contract.
Thereafter, Dean’s attorney faxed correspondence to TBS stating Dean would take over the construction contract in the event TBS did not return to the job site and resume performance within 24 hours of receiving the attorney’s correspondence. The next day TBS resumed performance. When the picketers returned to the job site, TBS again removed its equipment and employees. Dean faxed a second notice to TBS stating Dean would take over the construction contract and terminate TBS if it did not return to the job site within 24 hours. When TBS’s employees failed to report to the job site the next day, Dean terminated the construction contract and retained another contractor to complete the work.
To recover the additional cost incurred in completing the work, Dean filed suit. The trial court denied Dean’s claim stating Dean failed to provide the notice of termination required by the construction contract. Specifically, the court held the faxed notices were not “written notice.”
On appeal, the appellate court noted the construction contract could be terminated by giving 24-hour written notice. Contrary to the trial court, however, the appellate court held the faxed notice was written notice because the prior custom and usage between the parties established that faxed notices had been used and accepted by the parties. Thus, custom and usage became part of the construction contract.
This case highlights the importance of a properly drafted contract. Had the parties in Dean precisely drafted their contract, they may have been able to avoid the issue that led to the contract’s termination and the resulting cost of the litigation described above. The attorneys in our firm regularly draft construction and other contracts giving special attention to the details of each section of the contract. Please telephone us if you need assistance drafting or interpreting a contract.