Risk management & disputes: Alaska Contractor Business & Law Practice Questions

What is mediation?

A mediator does not decide the dispute. The process is usually confidential and non-binding unless the parties sign a settlement.

How does arbitration differ from mediation?

In arbitration, a private neutral (or panel) hears evidence and issues an award. Courts enforce arbitration awards and allow only narrow grounds to overturn them.

Under the Federal Arbitration Act, how are written arbitration clauses in contracts involving interstate commerce generally treated?

Section 2 of the FAA makes written arbitration agreements valid, irrevocable and enforceable, save on grounds that exist at law or in equity for revoking any contract (such as fraud or unconscionability).

Which is usually an advantage of arbitration over litigation for construction disputes?

Parties can pick arbitrators who understand construction, and the process is private. Trade-offs include arbitrator fees and very limited appeal rights.

A contract says disputes go first to negotiation, then mediation, then binding arbitration. What is this called?

Stepped clauses push parties to settle cheaply before moving to a binding process. Skipping a required step can delay or derail a claim.

Why do most construction contracts require written notice of a claim within a set number of days?

Notice provisions let the owner verify facts and limit damages. Many courts enforce them strictly, so contractors calendar and meet every notice deadline.

Which is the best evidence to support a construction claim?

Contemporaneous documents are far more persuasive than later recollection. Good records also help settle disputes before they escalate.

Which list shows the four basic ways to handle a business risk?

A contractor can avoid a risk (not bid the job), reduce it (safety programs), transfer it (insurance, indemnity, subcontracts) or retain it (deductibles, contingency).

Requiring subcontractors to carry insurance and sign indemnity agreements is an example of which risk strategy?

Insurance, bonds, indemnity clauses and subcontracts move the financial consequences of a risk to another party.

What is the difference between a statute of limitations and a statute of repose for construction defects?

A statute of repose cuts off claims a fixed number of years after substantial completion, even for defects not yet discovered. The number of years differs by state.

What is a dispute review board (DRB) on a large project?

DRB members are chosen at the start, visit the site regularly and hear disputes as they arise. Their recommendations are usually non-binding but are often accepted.

An owner disputes a $20,000 invoice and sends a $15,000 check marked "payment in full," which the contractor knowingly cashes. What doctrine may bar the rest of the claim?

When a debt is genuinely disputed and the creditor knowingly accepts a payment offered as full settlement, the remaining claim may be discharged. Rules on reserving rights vary by state.

A contract says the losing party in a dispute pays the winner's attorney's fees. What is the usual rule without such a clause in U.S. courts?

Under the American rule, each party pays its own lawyers unless a contract or statute shifts fees. Fee clauses strongly affect whether a claim is worth pursuing.

Which contract clause limits the contractor's exposure to lost profits or loss of use claimed by the owner?

A waiver of consequential damages bars indirect losses (lost profits, lost rent, loss of use) between the parties, leaving direct damages recoverable.

What is usually the cheapest and fastest first step to resolve a disagreement on a job?

Most disputes are best handled early by the people closest to the issue. Escalating too fast adds cost and damages relationships.