interpretation of contract terms in a construction contract the most important contract term from iran's perspective is section one five zero five part four of the contract which relates to mobilization and demobilization and specifically the manner in which payment is to be made less critical are sections fourteen point four point two and fourteen point four point three of the contract which relate to terminations for convenience finally also necessary for the cords interpretation or certain defined terms in the contract specifically the terms contract the quality asphalt decision so let me just say thirty if so terminations for convenience allows a party it's concerned to cancel its contractual obligations so that it's not a breach of contract right you follow me there so what's your best authority for the proposition that terminations for convenience actually changes what a party is required to do under a contract rather than simply precluding liability for a breach it is specifically after any modifications change orders or revisions to that contract so the scope of work is an evolving sort of scope of work rather than a specific contract set at the time the contract was entered into if you look at the definition of contract documents it is specific that it includes the post execution documents in this case since were accordingly reduced and according to section fifteen zero five it says you have three phases of payment the first phase is after the first four percent the second payment is after the second four percent the third payment which is the critical one is after the submission of all submittals required by the contract since the contract is another valving term and incorporates the you're terminations for convenience what then becomes required i would agree with that your honor what is required is what is required by the contract and specifically the work and what is required by that is defined by the contract documents and if the contract documents evolving as they do in this case then you necessarily have a lesser requirements than all the submittal let me give you some examples  windfall if you received a full mot the mob said of the item of eight hundred seventy three thousand dollars not at all and the reason for that is the way this contractor spread his work for the first  the contractor bid this project his entire first phase work included the full amount of base bid that's how he chose to spread his amount and when he did that he was still one hundred  twenty five thousand dollars low and the base spit him out he's not receiving a windfall the contractor is receiving what he specifically contracted for to perform the base bid work how do you d with section fourteen point four point two which was relied on by the district court which provides that part of the job start up and phase out costs not amortize should be paid by the city which seems to suggest that you  the contractor is entitled to the four percent four percent and then all remaining submittals are all required submittals then he has fully amortized that contract he is entitle to his full payment under the contract or as provided in the payment provisions of the contract and this is specifically a payment provision of the contract that talks about how you are to receive payment under the terms of the contract now fourteen point four point two would make more sense in the situation where you have a lump sum contract in other words an undifferentiated construction contract where you don't have where you don't have a specific item is ation for the mobeen demobilization in that case let's say you are proceeding on a percentage complete basis and you get seventy five percent complete and the contract is terminated then perhaps the diem opus set up and ted tear down hasn't been fully formed fully performed so they have to at that point determine what uncompensated costs have been paid in this case however you don't have that situation you have a specific mobeen d mo provision you have specific terms which justify its payment and here's why this is a fair result first it's a fair result because one of the things you see here is that the contract the mobilization and demobilization on a construction contract and particularly this one is going to occur regardless of whether you have phase one phase two phase three phase four in other you deem mobilize the contract you move all your equipment out there's really no change in your cost so essentially they fully perform their mobilization and demobilization the work which would entitle to receive the full amount of this payment when you when you exercised the determination for convenience you sent a letter right yes and and it and then i think the city responded and it december port platter it did all right and it city listed all the submittals that arayan was required to remit in order to close out the contract so it seems like i'm going to ask them about this too that one way you but did they did something change and then after they changed their position after that or does that as a matter of fact your honor you're looking at e r one eighty five which talks about  one eighty seven they specifically acknowledge that we have fulfilled our obligations to complete all the submittals nevertheless at that time and thereafter they have refused to pay us for the remaining amount of the up of the  open mobile costs in connection with that or a couple of other things i would like to bring to court's attention the votes are something that i don't know about that happened that they changed their position or was that or were they always of the position that you don't get paid they have all letters seems to i mean one way you could look at the latter is that a graze with your side and we believe it does a agree with our side that's why we believe when they only paid us the four hundred eighty two thousand or so that they were incorrect that by making the final submissions that we were entitled to the final payment they simply refused to pay it as a result of that we have only been paid on our base bid contract seventy five percent of the proceeds in the base bid contract because of the withholding of that amount even though we fully performed the bid contract in connection with that one of the key things to remember is this contract contemplated the possibility that there would be no work after the base bid contract because of the yield as a consequence of that there was always the possibility that mobeen d mo would be ended at the end of the first season or first face so there is no surprise here the third item is if the shoe were on the other foot and instead of having a modification that reduces the scope of the work let's say the city of seward chose to add a fourth in a fifth phase and increased the scope of the work and as part of that there were additional submittals that were required now if you follow if you agree with the city of seward's position then that shouldn't matter and once the base bid or all the submittals required by the original contract were submitted then orion would be entitled to its demobilization costs even though the scope is increased and there were more required it was then when you complete the final submittal requirement you're entitle to the final earned amount for here for your demobilization that is what distinguishes this case from the quality case there is a flexible definition of of contract in this term and contract scope because it is dependent on the contract documents which evolved throughout the contract necessary to complete the construction of the project since he didn't the condition to that which was inflexible was not met and they weren't bound to pay full mobeen d mo costs second distinction that in quality nobody ever quote contemplated an early term a nation of the project in this case the possibility of an early terminations was comp contemplated as reflected by the terminations for convenience language as well as the fact that the mobile and the mobile provision was specifically in the base bid phase contract good morning and may it please the court william earnhardt city attorney city of seward i want to pick up just right where that left off and you know let's go to the december letters as judge callahan efforts in its december second letter the city appears to have confirmed this understanding stating that the demobilization is permitted at your schedule doesn't that exchange reflect the party's understanding the full but i think that comes into that the big point that the district court recognized when the district court said that's because a new contract did not arise when the original contract was terminated for convenience the term contract is used in part c of the mobissimo provision can only be only rationally be read to refer to the original contract i think that's very important the last point that was brought up by mr mock in times was he said well this contemplated early terminations if you have been off by more than twenty five percent there was a provision that said we're going to sit down and reanalyzed renegotiate a price there you are only off by twenty three percent so they had an obligation to continue on the contract they said we just can't we took that risk but we can't afford it now so it was orion that said please terminate for convenience and just leave us a status if they had been under over twenty five percent off field and then we couldn't come to agree price there would have been a termination of the contract at that point the scope of the contract would have changed and orion would have gotten their mobilization demobilization bid because that was a great price you dress friends point that or one i just pick up with that issue because i think that's an important case or one contract amount that six point one million dollars it had three points in the contract where because this is a quarry that you know there's even a riot had experience with but no one knew exactly what the yields would be three points were recalled cause call for mandatory renegotiation if the yields were off over twenty five percent anything less than that was within orion's risk and that's it  supplemental axert a record thirty one and thirty two that's what was signed for the contract the contractor perform all the work under the contract six point one million dollars there's only one i'm out there and that was what was signed off and there's no issue before the court as to what orion's intent was that's a factual issue that was not raised with the district court where both parties agree this was strictly a legal issue i have made my question clear could you explain to me why would increase because more work was done on the contract because the initial phase of the contract only called for a little tiny bit of rock to be pulled out the vast majority of the other three phases of this contract with the whole lot more rocks and more equipment more time and and i think this is a very key issue although it does go to those factual provisions that orion tried to raise orion itself said well the mo was bid very high cause we had a contingency in case we had to get the rock from kodiak and had to mobilize to kodiak to get the rock there are a lot of things that could happen throughout that contract to bring in more equipment but i of the demobilization is again going to happen throughout the project if they move equipment to different projects or bring in different equipment but i think what is most important is under the contract once you hit terminations for convenience that there is no contract that it's frozen and stays i guess i'm understanding you to say if they've been above twenty five percent that you just that you just sort of cut them a break to exercises terminations of convenience and then that somehow changes the terms of the contract it doesn't change the i mean as i reflect in this is that we're just interpreting the contract well let's take it and it isn't terminations for convenience no once disputing that that's so that means it's not a breach it's a terminations of convenience now and you terminate for convenience what what does that mean what happened is required but says they will be paid for all work in place at the time of terminations and that's at eleven twenty not entitled to the expectancy damages of the eight hundred thousand to give themselves a two hundred twenty percent profit on that so what evidence is there that that that that the equipment that was there when they did the term nation for convenience is equipment that they didn't need for the first stages when they terminated i think it's absolutely irrelevant at that point they're getting paid there is no c and they have to demobilize and you mean to say if they had gone further then that's what they would have had more mobilization costs and that's not my understanding of what this record shows this record didn't speak did not address that at all at the district court that wasn't at issue we're talking strictly about the contract language and whether they would have incurred significant costs or not i don't know you're both arguing that we have to settle this straight upon the contract but actually some of the facts seem to matter for got thrown out the window the only time we go back to there is if we had agreed prices and that takes us right to the q a p case which is directly on point q a p had submitted a bid for seven hundred and forty seven thousand dollars i think it was and that's what they wanted because that was quote their agreed price that they were entitled to under the terminations for convenience provision however the hearing officer you're in the court upheld no you only get your actual cost which is the four hundred forty three in this case the actual costs incurred by orion were two hundred seventy three but because they had had them or ties payments they'd already recovered an eighty percent profit on their actual costs they weren't entitled to their expectancy damages of this additional through four hundred thousand dollars  again this is one contract amount and what's very probative on that is not only that they signed that but ten point one e r one one two talked about the contract price the intent is a completed project the terminations of convenience is a mechanism to avoid a breach of contract and what and so a breach of contract then would they wouldn't be you know then they have to pay all the damages for breaching the contract which everyone agrees terminations for convenience and so it doesn't seem to me to be relevant that you gave them a break to do that at twenty three percent as opposed to if it was twenty five percent because this came to the district court as determination for convenience then when i look at those letters the november twenty fifth letter and then your december second letter it would seem to me that the city appeared to confirm the understanding that demobilization is permitted at your convenience then and if that was the understanding between the parties i don't understand why we shouldn't interpret part c of section sarah one five zero five know if we had changed the term of the contract if we had if we had made it just this phase one because we couldn't come up with an agreed price because they were off by more than twenty five percent that would have been the end of the contract and the thought you loved to do demo costs were not but you know if they're if they're demoted taken them to six hundred thousand dollars they would have an entitled to additional costs up to that six hundred thousand dollars but fifteen zero five is out the window they don't get the expectancy you know one thing we've got to think about is what happens if we didn't do the terminations for convenience here if they've been off by more than twenty five percent we would renegotiate it and we would have had to end the contract with a continuation the contract either way but it didn't orion had a duty to go on to the next three phases even though they were taking a loss at that point and they could hope that their their reels would be off by more than twenty five percent renegotiate the final two phases or that they get really really good deal to make up some that way or they could have got it from kodiak when you allow them to do determination for convenience why don't we then stick to the contract i mean maybe that was a bad decision on the what the city did was yes it is under the contract but it's under the terminations for convenience clause of the contract the rest of the contract the rest of the contract is gone it doesn't exist terminator for convenience which in a perfect world november twenty fifth they walk away like they never met each other unfortunately you know with construction you're going to have to have some additional cost to clean up the site to make it safe to get the equipment out of there and to balance accounts of the orion had been not been paid for the rock or that if it had been a real terminations of convenience that had not been graced by new if they had actually been over the twenty five percent that then they would have been entitled to all of this i don't i can't see how we can look at it differently the fact that you gave them grace they are the contract terms don't change well as i heard you to say if they had really if we had just if they were really entitled to determination of convenience and there was no they would have been entitled to their mo d mo i think they would have to at least a better argument for it that the contract itself had been is plain to be why you gave them the termination for convenience we gave them the terminations for convenience and then this is in the record was just simply we got a very unhappy contractor we want to get this project done and rebuild as fast as we can but the key thing is if they had him it was kind of a little bit like a breach of contract they had breached the contract but we didn't you know rather than  yeah but under the contract fourteen point four zero two throws out fifteen point five and everything else the only time you look to the rest of the contract is as to owner because orion could not have ordered it they asked that they have sexually asked us to order them to stop it both parties made a decision of we're not going to go for four expectancy a reliance and it comes down to november twenty fifth orion sent a letter saying ok this is terminations for convenience no further obligations on either party and that's what terminations for convenience is is about we don't the we don't pay any money  the contractor the contractor doesn't do any more work although it does have the subsection to allow for that to disappear but orion put in for another indecl four percent based on the entire contract amount they said the contract is six point one million orion never completed the contract they could have been in breach but seward cut them a break and said ok we're going to order you to stop right now let's go to terminations for convenience and at that point you receive what you've done for work in place at the date of the terminations for convenience and that work was not done at that point quick points first the term nation for convenience i believe is under again to three aloud irrespective of whether it's over the twenty five percent if you look at excerpt of record one seventy four it was the city of seward who invited our terminations for convenience and specifically indicated it was allowed second fourteen point four point three which also relates to terminations for convenience talks about the reasonable cost of settlement to the extent these costs have not been covered under the payment provisions of the contract fifteen zero five part four is specifically a payment provision of the contract therefore they are entitled to recover that finally this was a rock job it was a rock job in phase one through all four phases the equipment was mowed for the blasting and