{"id":892741,"date":"2017-08-16T15:51:43","date_gmt":"2017-08-16T21:51:43","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=892741"},"modified":"2017-08-16T15:51:43","modified_gmt":"2017-08-16T21:51:43","slug":"construction-contracts-arbitration-provisions-word-may-mandatory-maybe","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/construction-contracts-arbitration-provisions-word-may-mandatory-maybe\/","title":{"rendered":"Construction Contracts And Arbitration Provisions: Is The Word \u201cMay\u201d Mandatory? Maybe!"},"content":{"rendered":"<p>Matthew DeVries | <a href=\"http:\/\/www.bestpracticesconstructionlaw.com\/2017\/08\/articles\/alternative-dispute-resolution\/arbitration\/construction-contracts-and-arbitration-provisions-is-the-word-may-mandatory-maybe-2\/\" target=\"_blank\">Best Practices Construction Law<\/a> | August 10, 2017<\/p>\n<p>You don\u2019t always say what you mean. And you don\u2019t always mean what you say. \u00a0In construction contracts, parties\u00a0attempt to use plain and ordinary words to describe their respective obligations.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-3045\" src=\"http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1-640x476.jpg\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" srcset=\"http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1-640x476.jpg 640w, http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1-150x112.jpg 150w, http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1-300x223.jpg 300w, http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1-768x571.jpg 768w, http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1-40x30.jpg 40w, http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1-80x59.jpg 80w, http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1-160x119.jpg 160w, http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1-320x238.jpg 320w, http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1-50x37.jpg 50w, http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1-60x45.jpg 60w, http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1-96x71.jpg 96w, http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1-125x93.jpg 125w, http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1-270x201.jpg 270w, http:\/\/www.bestpracticesconstructionlaw.com\/wp-content\/uploads\/sites\/142\/2017\/08\/words-1.jpg 994w\" alt=\"\" width=\"640\" height=\"476\" \/><\/p>\n<p>As an example, when the parties use the word \u201cshall\u201d in their agreement, they generally understand that the obligation specified is\u00a0<strong><em>mandatory<\/em><\/strong>.\u00a0Or when parties use the word \u201cmay\u201d in their contract, performance is\u00a0<strong><em>permissive or optional<\/em><\/strong>\u00a0given the plain meaning of the word.\u00a0Consider the following construction contract provisions:<\/p>\n<blockquote><p>\u201cIf the Owner fails to make payment for a period of 30 days, the Contractor\u00a0<u><i>may<\/i><\/u>, after seven days written notice, terminate the Contract and recover from the Owner payment for Work performed.\u201d<\/p>\n<p>\u201cThe Work\u00a0<u><i>may<\/i><\/u>\u00a0be suspended by the Owner as provided in Article 14 of the General Conditions.\u201d<\/p>\n<p>\u201cPayments\u00a0<u><i>may<\/i><\/u>\u00a0be withheld on account of (1) defective Work not remedied, (2) claims filed by third parties, or (3)\u00a0failure to carry out the Work in accordance with the Contract Documents.\u201d<\/p><\/blockquote>\n<p>In all of theses examples, it seems clear that the parties agreed to allow\u2014but not require\u2014the specified performance.\u00a0The word \u201cmay\u201d was permissive in nature.<\/p>\n<p>According to some courts, however, this traditional line of reasoning is no longer the trend in the context of arbitration provision in construction contracts.\u00a0For example, in\u00a0<i>TM Delmarva Power v. NCP of Virginia<\/i>, the Supreme Court of Virginia held that the parties\u2019 use of the word \u201cmay\u201d in the dispute resolution provisions of their construction contract required mandatory participation in arbitration at the election of one of the parties.\u00a0The arbitration agreement provided:<\/p>\n<blockquote><p>\u201cIf any material dispute, disagreement or controversy concerning this Agreement is not settled in accordance with the procedures set for in [previous section] . . . then either Party\u00a0<i>may<\/i>\u00a0commence arbitration hereunder by delivering to the other Party a notice of arbitration.\u201d<\/p><\/blockquote>\n<p>The court\u00a0held that the above provision was mandatory at the election of one of the parties: \u201cThe word \u2018may\u2019 . . . means that either party may invoke the dispute resolution procedures, but neither party is compelled to invoke the procedures. . . .\u00a0<i>[But] once a party invokes the arbitration provision, the other party is bound to arbitrate.<\/i>\u201d\u00a0 The\u00a0<em>Delmarva<strong>\u00a0<\/strong><\/em>court reasoned that the disputes provision would be \u201crendered meaningless\u201d if the word \u201c<em>may\u201d\u00a0<\/em>was interpreted as permissive\u00a0because parties to a commercial contract can always choose to submit their disputes to arbitration. \u00a0The Fourth Circuit reached the same decision in\u00a0<i>United States v. Bankers Ins. Co.<\/i><\/p>\n<p>Given the trend that the courts have interpreted the term \u201c<em>may<\/em>\u201d as \u201c<em>shall<\/em>\u201d in the context of arbitration agreements, parties to a construction contract must be careful in understanding both the plain, ordinary meaning and the legal meaning of the particular words used.\u00a0In the above examples, if the parties wanted arbitration of disputes to be permissive and non-mandatory, they could have clarified their contract by including more explicit language (<i>i.e., \u201c<\/i>any and all disputes,<i>upon mutual agreement,<\/i>\u00a0may be arbitrated\u201d or \u201c<i>with the consent of the other party,<\/i>\u00a0either party may commence arbitration\u201d).\u00a0\u00a0It is important in contract drafting that you say what you mean and you mean what you say.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Matthew DeVries | Best Practices Construction Law | August 10, 2017 You don\u2019t always say what you mean. And you don\u2019t always mean what you say. \u00a0In construction contracts, parties\u00a0attempt to use plain and ordinary words to describe their respective obligations. As an example, when the parties use the word \u201cshall\u201d in their agreement, they&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/construction-contracts-arbitration-provisions-word-may-mandatory-maybe\/\">Continue reading <span class=\"screen-reader-text\">Construction Contracts And Arbitration Provisions: Is The Word \u201cMay\u201d Mandatory? Maybe!<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[41,9],"tags":[9895,9310,72],"class_list":["post-892741","post","type-post","status-publish","format-standard","hentry","category-arbitration","category-construction-contracts","tag-advise-consult","tag-arbitration-provision","tag-construction-contracts-2","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Construction Contracts And Arbitration Provisions: Is The Word \u201cMay\u201d Mandatory? 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