Construction Law: Know your rights as a contractor or client

Construction projects can be complicated. In most projects, there are many parties with varying roles set out by a network of contractual obligations. If something falls through, it can cost everyone involved a significant amount of money. For this reason, it is important to have legal protections in place long before construction begins.

Many legal issues arise throughout the course of construction, and these issues can involve technical language, unique legal relationships, contracts, and more. If you are considering any type of construction, it is important to consult with a law firm that understands the language and principles of construction law and that can represent your interests from start to finish.

Construction Agreements

Construction projects rely on promises between different parties. Those promises should be memorialized in a carefully-drafted and negotiated construction agreement that, when signed, will be binding on each party. You want to ensure you have an experienced attorney negotiating, drafting, and reviewing any agreements to be certain that your rights and interests are adequately protected should something go wrong.

Breach of Contract

As mentioned, construction projects involve complex agreements that are legally binding on everyone who signs the contract. Despite having such contracts in place, parties often fail to uphold their end of the deal and breach the contract. How a breach is handled is often dictated by the terms of the contract (emphasizing the importance of a well-drafted agreement). Damages can vary in a construction contract case, ranging from money damages to specific performance by the breaching party.

Change Orders

Not every detail of a construction project can be perfectly planned out from the outset. Therefore, changes often need to be made along the way to adapt to evolving needs or goals. In such a situation, the parties can all agree to amend the original construction agreement through a change order. Change orders must satisfy all legal contract requirements and should always be overseen by an experienced construction contract lawyer.

Construction Delays

Construction delays can sometimes result in litigation for damages or a breach of contract action if the delay results in a significant loss of money to one or more party. If you suspect that a construction delay may be on the horizon for you, it is important to address it. Below, are some general recommendations for how to approach construction delays.

If You Are the Client/Customer

If you are the client/customer (rather than a contractor or mechanic) and suspect a damaging delay on your construction project, the first thing you should do is bring the matter up with your contractor, and let him know that the delay will hurt your project or violate the contract. Often, these delays are foreseeable and preventable with the right workaround. If the contractor knows what’s at stake, he may be willing to reallocating resources to ensure that your project is completed on time.

Potential damages include all kinds of financial burdens incurred by the delay (unless otherwise prescribed by contract). For example, if your construction project involves your home, you may have to say in a hotel. If you own or operate a business, a construction delay could prevent you from operating and generating revenue. Letting your contractor know that these kinds of issues may arise (and that they could potentially be liable for the damages) can get your project back on track and put them on notice that you may take action.

If a delay does happen, you should keep track of any expenses you incur. Keep in mind that the law will only provide you with compensation for reasonable damages that you could not reasonably mitigate. So, if you have to rent a hotel room, don’t rent a suite; if you have to throttle back your business while your office is under construction, only do so to the extent necessary to accommodate the delay.

If You Are the Contractor Responsible for the Construction

As a contractor, few things are worse than realizing that your project may be delayed. Fortunately, you can minimize your legal liability by:

  • Addressing the matter informally: In some cases, simply explaining the situation to your customer will avoid any legal disputes.
  • Asking to modify your contract: If the property owner agrees to a change order or contract modification to extend the deadline then you’re typically off the hook.  Sometimes it is wise to offer to provide some services at a discount as consideration for such a change.
  • Preparing for legal action: If a delay is inevitable, and seems likely to injure your client, it’s best to contact a qualified construction attorney as soon as you can. Good counsel can help clarify your exposure, negotiate from a place of knowledge, and protect your interests.

Dispute Resolution

When conflicts or allegations arise regarding a breach of contract, delays, or another type of misconduct, litigation is usually a last resort. With the help of a skilled attorney, you can often resolve disputes simply by sitting down, discussing the matter, and negotiating a solution. If that doesn’t work, a contract may require parties to engage in arbitration or another type of mediation before litigation is possible. We can assist with all types of dispute resolution to ensure your rights are protected.

Cost Overruns

It should be no surprise that many construction projects run over budget. Accurately estimating costs of equipment, labor, and supplies for an entire development can be difficult and, all too often, construction projects result in cost overruns, which can also result in disputes over who covers the cost.

Mechanic’s Liens

We believe in every contractor and subcontractor’s right to be paid for the work completed. If nonpayment is an issue, we can assist clients in obtaining a mechanic’s lien against the property owner, as well as following up with a lawsuit when necessary. For more information, read our article on mechanic’s liens.

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