Southern Constructors, Inc. v. Loudon County Board of Education
58 S.W.3d 706 | Tennessee Supreme Court | 2001
What This Case Means for Subcontractors
Southern Constructors sued to overturn an arbitration award from a dispute with Loudon County Board of Education over a school construction contract. The contractor argued the school board had no legal authority to arbitrate. Tennessee's Supreme Court ruled that school boards do have the power to arbitrate construction disputes because that power is implied when they have the express authority to enter into construction contracts. This decision protects arbitration clauses in construction contracts with public school boards.
Key Takeaways
- •Arbitration clauses in school construction contracts are enforceable even though school boards are government entities with limited powers
- •If your contract with a school board includes an arbitration clause, you cannot challenge it by claiming the school board lacks authority to arbitrate
- •Include clear arbitration language in all school board construction contracts—courts will uphold it as a reasonable extension of the board's contracting power
Power to arbitrate construction contract disputes is fairly implied from express authority to enter into construction contracts.
Frequently Asked Question
Can a school board force me into arbitration if our construction contract has an arbitration clause?
Yes. Courts have ruled that school boards have the legal authority to arbitrate construction disputes because arbitration is a reasonable extension of their power to enter into construction contracts. If you signed a contract with an arbitration clause, you cannot escape arbitration by arguing the school board lacks authority to do it.
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