There are times when business contracts are canceled for one reason or another. In some situations, such as with building contracts, the needs of the parties may have changed or the project cannot be completed as originally planned. When this is the case, cancelling the contract is likely to lead to contract litigation.
Litigation has arisen between the state of New Jersey and Barnard/Judlau Joint Venture over a canceled construction contract. BJJV is comprised of two construction companies that were awarded a contract by New Jersey to build a mile-long tunnel into Manhattan. The December 2009 contract was worth $583 million.
However, after concerns about the project’s design and final cost were raised, Gov. Chris Christie canceled the contract in October 2010. At the time the contracts were canceled, BJJV claims that it had completed 50 percent of the final design work and reports for the project, had hired subcontractors and set up an on-site office, among other things. BJJV sued the state of New Jersey for breach of contract. In the suit, BJJV claimed damages of $10.3 million.
On Oct. 15, the New Jersey Transit Board voted to settle the case against BJJV for $5.6 million. As part of the settlement, New Jersey Transit gets to have all the designs and documents created by BJJV for the project. There are plans to possibly use these designs in the future.
Like this case shows, not all contract litigation has to be resolved by a court. Court cases can be lengthy and expensive as businesses fight over contract terms and damages. Instead, settling a case outside of court can allow for a quicker, more satisfactory solution. Businesses can come to an agreement that fits both of their needs. Settlement can be achieved through a variety of alternative dispute resolution processes.
Source: Asbury Park Press, “NJ Transit to settle last of nixed tunnel contracts,” Larry Higgs, Oct. 15, 2012