9.1 Construction Contracts in General

• Library: Virginia Construction Law Deskbook (Virginia CLE) (2019 Ed.)

9.1 CONSTRUCTION CONTRACTS IN GENERAL

9.101 General Rules of Contract Apply. In general, construction contracts are no different from any other type of contract. The same rules apply regarding their formation, construction, and essential elements. In Blake Construction Co. v. Alley, ¹ the Virginia Supreme Court explained that the rights of the parties in a construction project arise from contract:

The parties involved in a construction project resort to contracts and contract law to protect their economic expectations. Their respective rights and duties are defined by the various contracts they enter. . . . Any duty . . . in this regard is purely a creature of contract. ²

9.102 Meeting of the Minds. The fundamental requirement of contract formation is a "meeting of the minds." ³ The parties must agree "on every material phase of the alleged agreement." ⁴ The courts look to the parties' words and actions to determine whether such an agreement exists, ⁵ and a court may find an agreement even when no formal written document exists. For example, a party may demonstrate its acceptance of a contract by performance without ever executing a written document. ⁶

9.103 Mutuality. Another requirement of an enforceable contract is mutuality—both parties must have enforceable obligations under the contract. ⁷ Mutuality exists "when there are promises on each side that

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something shall be done for the benefit of the other side." ⁸ Contract provisions that disclaim the availability of remedies may negate mutuality and create an unenforceable contract. For example, in Busman v. Beeren & Barry Investments, LLC, ⁹ a seller sought damages for breach of a contract to purchase real property. The circuit court found the contract unenforceable because it contained a provision stating that the buyer's sole remedy if the seller defaulted would be return of the buyer's deposit. Because the buyer had no right to enforce the agreement, the seller also could not enforce the agreement.

9.104 Quantum Meruit. Absent a formal agreement, the parties may have an implied contract. When one accepts the benefits of the work of another, performed with the understanding that the services would be paid for, there is an implied contract to pay for those services under the doctrine of quantum meruit, a common law remedy for unjust enrichment. The Virginia Supreme Court has explained that

he who gains the labor or acquires property of another must make reasonable compensation for the same. Hence, when one furnishes labor to another under a contract which, for reasons not prejudicial to the former, is void and of no effect, he may recover the value of his services on a quantum meruit. ¹⁰

Quantum meruit is inapplicable where there is an express contract. ¹¹ But to defeat a claim for quantum meruit, there must be "an express, enforceable contract between the parties covering the services for which quantum meruit recovery is claimed." ¹² A plaintiff may plead claims under an express contract and claims for quantum meruit in the alternative. ¹³

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9.105 Force Majeure. In certain circumstances, parties may be absolved of contractual obligations due to unforeseen circumstances. Virginia common law provides such relief only for "such an unusual and extraordinary manifestation of the forces of...