Construction contracts are legally binding agreements made between two or more parties to perform certain tasks and services related to a construction project. They are often very detailed and comprehensive, including provisions for payment, deadlines, quality standards, and even claims and dispute resolution procedures. Unfortunately, claims and disputes in construction contracts are common because these are complex projects with potential for unforeseen events, and often large sums of money are involved.
The difference between claims and disputes in construction is that claims are issues that may arise during construction projects relating to non-performance or mistakes. If claims are not addressed when first asserted, they can quickly devolve into disputes that are costly for all parties.
When unresolvable claims turn into disputes between parties, it can cause costly delays and increase expenses. Disputes can be difficult to resolve and end up in litigation, making it all the more important for all parties to a construction contract to be fully aware of their rights and obligations under that agreement.
When construction problems arise or are alleged, a claim is made by or against the builder or contractor. If these claims are not resolved, it could lead to a dispute between parties. Below are some of the more common claims arising from a construction contract.
- Defective workmanship. Defective workmanship is a claim that occurs when the work performed does not meet the required standards. This can include things such as incorrect measurements, incorrect installation, or improper use of materials.
- Project delays. Delay in completion is a type of dispute that can be caused by either the contractor or the client and can incur additional costs for the project.
- Deficient materials. This claim occurs when the materials used for the construction project do not meet the expected quality or are inappropriate for their purpose.
- Non-payment. Non-payment of invoices is a dispute where the client fails to pay the contractor for their services.
- Breach of contract. A breach of contract claim occurs when one of the parties fails to fulfill the agreed-upon terms and conditions of the contract.
- Design flaws. Design errors occur when there is a claim that the initial design of the project is flawed or inadequate, causing additional expenses for the developer.
These are some of the most common types of construction claims that could lead to disputes. It is important for both parties to be aware of these issues and take the necessary steps to avoid or resolve them.
It is important to ensure that all contracts are in writing and are clearly understood by both parties to avoid any potential disputes in the future. The contract attorneys at Nix Patterson can help resolve claims and disputes by evaluating the contract and working to resolve the differences outside of litigation.
Typical causes of claims which could lead to disputes that counsel and clients need to consider include:
- Poor project planning and inadequate design
- Forced design changes, errors, omissions, and extras
- Changed geological conditions
- Poor communication and coordination between project teams/contractors
- No-show sub-contractors
- Budget overruns/inaccurate bids
- Insufficient bid preparation time
- Inadequate bid information
- Mismanagement and/or poor craftsmanship by contractors
- Misunderstanding of contract intentions, terms, and conditions or contract interpretation
- Various project delays — some of which are compensable, some of which are non-compensable
- Late or missing permits
- Inclement weather conditions delaying meeting schedules
Obviously, any of these claims can quickly turn into a dispute that factors into contract arbitration, but thoroughly understanding the contract upfront can help you avoid costly disputes erupting during construction.
An attorney can assist with construction claims and disputes in a number of ways. First, they can help to identify the difference between a claim or dispute in construction contracts that may exist in a particular situation and advise their client on the best course of action to take. Attorneys also review contracts and other documents to ensure that their client’s rights are being represented.
In addition to providing legal advice and guidance, an attorney can also assist with the process of filing a claim or dispute with the appropriate court. This includes gathering evidence, researching relevant laws, and filing all of the necessary paperwork.
In some cases, an attorney may also be able to help their client with the appeals process. Finally, an attorney can also provide representation during any arbitration or negotiations that may be necessary to resolve the dispute.
By having a complete understanding of your legal options in a contract dispute, you can ensure you take the correct steps to resolve the conflict, so your business can continue to operate normally. Contact the contract dispute lawyers at Nix Patterson today to discuss the unique details of the case and form a plan of action.