Managing Partner
A construction contract dispute can be a nightmare. The construction industry is a field in which contract disputes are common. This is partly because a construction project is likely to involve so many different parties working together to complete a project.
Worksite collaboration can raise questions of liability and responsibility when there’s a problem. Here are some of the most common construction contract disputes encountered in the construction industry and how to handle them.
Disputes over Delays
Delays are common in the construction industry. Projects take longer than anticipated, supplies are delayed, and inclement weather can slow or halt progress. It’s common for many different contractors to work together on a single project. This means delays can create a domino effect, impacting start and end dates for a whole chain of workers.
Delayed start and end dates can even push contractors into the risk of contract breach on other job sites. Construction delays frequently lead to disputes and may even result in the party responsible for the delay being ordered to pay damages.
Undisclosed Site Conditions
It’s a common construction practice for companies to bid on jobs without seeing the site beforehand. When this happens, the bidding companies are usually given basic details about the construction site. Construction companies use this information to assess the type and amount of work a project entails and price their service accordingly.
When there is a poor representation or undisclosed conditions, a dispute might arise because the agreed-upon price didn’t take all site conditions into consideration.
Payment Issues
Payment can be complicated in the construction industry. Different types of claims must be submitted to show progress and request payment. There might be deadlines or strict guidelines for how a claim should be correctly submitted.
Incorrectly submitted claims can lead to construction contract disputes over insufficient or delayed payment. This can lead to further issues, like one contractor halting work until a payment agreement is honored.
Contract Errors
Many different parties are usually involved in a construction project. One building site might have engineers, designers, carpenters, roofers, electricians, plumbers, painters, landscapers, and more all working to bring together a finished project.
This complexity means that a great many contracts come out of a single construction project. More contracts mean more opportunities for contract errors. When mistakes and oversights are written into a contract, it can create some big legal issues.
Common contract errors include:
- Failure to identify if pricing is fixed-price or cost-plus
- Unclear penalties for delays
- Incorrect interpretation of the law
- Incomplete warranty terms
Knowing the terms of your contracts and working with an attorney to draft a strong contract and identify holes and errors can help you avoid common contractual issues.
Resolving Construction Contract Disputes
Although there are many different types of contract disputes, they all follow the same general path for resolution. It’s always preferable to try to settle issues out of the courtroom. You have less control of a court case outcome, and you’re more likely to find a solution that at least partially satisfies both parties if you opt for some form of alternative dispute resolution, or ADR.
Common forms of ADR that might be used to resolve a construction contract dispute include:
- Negotiation
- Mediation
- Arbitration
- Expert determination
Which type of ADR is right for you will be recommended by your lawyer based on the nature of the dispute you’re engaged in.
Construction disputes often lead to longer delays, higher costs, and more stress than the original issue at the center of the dispute. A construction best practice is to work to know and adhere to all guidelines, requirements, and timeframes.
When a dispute is unavoidable, contacting an experienced business attorney can help minimize the damage from a construction contract dispute. If you need guidance for construction contracts, reach out to the legal team at Woods Lonergan today.