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'Order Of Precedence' Clause Clears Away Potentialambiguity

Thursday, March 01, 2012 04:44 am


Contract Ambiguity

Ray Bell Construction Co., Inc. v. State of Tennessee, 2011

Tenn. Lexis 1143 (Dec. 12, 2011) A contract clause that barred the extension of an early-completion bonus--even though delays were beyond the contractor's control--was perhaps unfair, but it was not ambiguous.

The highway construction contract between the Tennessee Department of Transportation (TDOT) and contractor Ray Bell Construction Company (Ray Bell) included incentive and disincentive clauses regarding timely project completion and allowed for extensions to the completion date. But the parties disputed whether the contract permitted an extension of the incentive date. Ray Bell claimed that it was entitled to both the maximum incentive payment--$2.5 million--and an extended completion date. The Claims Commission and an appellate court agreed. The Tennessee Supreme Court did not.

Two sections of the contract addressed time extensions. The standard specifications [...]

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