Linan-Faye Construction Co., Inc. v. Housing Authority of the City of Camden
49 F.3d 915 | Court of Appeals for the Third Circuit | 1995
What This Case Means for Subcontractors
Linan-Faye Construction was terminated for convenience on a public housing project and sued for unpaid work. The district court applied federal law to interpret the termination clause, but the appeals court said New Jersey state law should apply instead. However, the court noted that New Jersey courts would look to federal common law for guidance anyway. The case was sent back to the lower court to determine what work qualifies for payment and whether the contractor can recover pre-termination expenses and damages from a withheld performance bond.
Key Takeaways
- •When a public agency terminates your contract for convenience, the state law of the contract location controls the interpretation—not federal law, even on federally-funded projects.
- •Document all pre-termination expenses carefully. Courts will examine what counts as 'work performed' to determine your compensation after termination.
- •If your performance bond is withheld after termination, you may have a separate claim for damages. Don't assume the bond is automatically forfeited.
New Jersey courts would look to federal common law for guidance.
Frequently Asked Question
If a public agency terminates my contract for convenience, what law determines how much I get paid?
The state law where the contract is located controls the interpretation, not federal law. However, courts will look to federal common law principles for guidance if the state hasn't specifically addressed termination for convenience clauses. Make sure you document all work performed and pre-termination expenses, as these determine your compensation.
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