Monday, April 14, 2008

"You keep using that word. I do not think it means what you think it means."

Inigo Montoya would have been all over Reliance Ins. Co. v. City of Boston, No. 07-P-066, a case decided today by the Appeals Court.

A statute requires performance and payment bonds on public construction projects. Performance and payment bond companies (a/k/a sureties) occasionally step in to take over for general contractors that can't get their acts together. As a stop-gap, the sureties require the contractor to assign any rights they might have against the owner of the project (though these probably automatically pass to a surety when they step in for general contractors that can't get their acts together).

In this case, the City of Boston included a provision in the contract forbidding the general contractor from assigning any of its rights or duties under the contract to anybody else.

The Appeals Court, in a decision that feels right, essentially reads additional language into this provision to the effect of "but assignment to a performing surety is okay."

If you wait around long enough, you'll find that sometimes common sense rears its head in the courtroom. Just don't hold your breath while you wait.

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