The decision by Florida’s Fourth District Court of Appeal reversed a judgment in favor of a property manager, and rests on language excluding certain existing systems from the work to be performed.
In All Year Cooling and Heating Inc v. Burkett Properties, Inc., a property manager obtained bids from multiple HVAC contractors to remove a cooling tower and replace six water-source HVAC systems with six split systems. Ultimately the property manager and one of the HVAC contractors entered into a contract to perform this work for $33,800.00.
The contract specified that the scope of work would include “a fully turnkey installation of all brand-new York air-conditioning systems.” However, the scope of work also indicated that “there are two split systems that are currently existing, working perfectly, and are not to be replaced as part of this contract.” Elsewhere in the contract, there was language indicating that the HVAC contractor would “certify and shall ensure that all split systems in the building, upon completion of all the work, will be fully compliant with all codes and regulations and shall be responsible for any costs related to the implementation and/or remediation of same.” (emphasis in original).
The contractor installed the six new systems, but did not do any work on the existing two split units. The property manager claimed the contract required those two systems to be brought up to code by the contractor, and ultimately sued when the contractor failed to do so. Following a bench trial, judgment was entered in favor of the manager.
On appeal, the Fourth District Court of Appeal reversed this ruling and remanded for the entry of judgment in favor of the contractor. In doing so, the court concluded that the purpose of the contract, as a whole, was for the removal of 6 systems and replacement of those systems, and that the code compliance portion of the contract should be interpreted as applying to those six systems that were part of the work of the contract. The court also concluded that the language in the scope of work referring to the two existing systems removed them from the scope of the contract. This was supported by evidence at trial that demonstrated that to bring one of those two systems “up to code” would have required replacement of it with a new split system, which clearly was not part of the contract.
Contractors should takeaway two key points from this decision. First, make your scopes of work clear, and outline what is and is not included in your work. This is especially important if earlier quotes or estimates included more or different work than the final contract. As part of this, you may want to consider specific exclusions for items that are commonly excluded from your scope of work, to ensure there is no confusion.
Second, be mindful of any language in your agreement that could conflict with or expand a scope of work. While this case isn’t clear whether the code compliance language was “boilerplate” or something specifically added, it could have been clearer that it only applied to the new work. If it was boilerplate, it should have been clarified to confirm the work it did and did not apply to.
As a contractor, your contract is one of the single most important documents for your business, so take time to (a) have them drafted properly, (b) have them updated regularly, and (c) have them flexible enough to adjust as needed for specific projects.