Subcontractor Prevails in "Scoop Count" Dispute with Obayashi
If you write payment terms for purchase orders or subcontracts, this case will make you sit up and take notice.
Obayashi hired a sub to haul material from its worksite at the Sound Transit Beacon Hill project. Payment was to be made on an hourly rate. The purchase order, after stating the hourly rate, stated that the sub was to use a truck "with the ability to haul 9 full scoops of semi wet material" at all times.
Obayashi took that language to mean that the sub actually had to haul 9 scoops per load. Based on evidence the sub failed to do so, Obayashi refused to pay the final $22,000 billed by the sub.
But the Court of Appeals rejected this contract interpretation, holding instead that the hourly rate did not depend on actual hauling of 9 scoops per load -- only (at most) that the sub furnish a truck with the "ability" to do so. The sub apparently complied with that condition, based on evidence that some hauls did indeed contain 9 scoops.
The fact the Obayashi signed a stream of truck tickets acknowledging the quantities removed did help either.
Copy of decision also available here Download file