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The Top Construction Contract Disputes Faced by Contractors

As a contractor, you’ve probably faced construction contract disputes.

You’re in a complex business that includes many people and details. It’s not just you and the home or landowner. You have subcontractors, architects, and vendors that play a role in the project’s completion. There are materials, dates, and costs. A construction contract helps cover all of the details. Most importantly, the contract should be written or reviewed by an experienced attorney in your state. After all, you need to protect yourself from disputes that can arise. Keep in mind, Virginia law requires you to have a written contract that is signed before work can begin.

So, what are some of the most common construction contract disputes?

Breach of Contract:

If any of the conditions and terms in a signed and binding construction contract are not fulfilled, that is a breach of contract. This can include missing a start or completion date. The type of materials may be questioned, or a change order may not have been completed. On the other hand, your client might not pay you on time. Either or both parties can breach a contract. You might be able to negotiate with a client if they allege a breach of contract. Better yet, have an experienced attorney draft your construction contract from the beginning. That way, it will be done correctly and include terms and conditions that will protect your business in the state where your business is licensed. Keep in mind that in Virginia, a client may have up to five years to make a claim for damages for a written contract breach.

Contract Errors or Omissions:

Construction involves many people and materials. If there are errors or omissions, it can make a dispute more likely. An error can occur at any point during construction from the design to the completed project. Errors can have a snowball effect by creating problems for other parts of the job. For example, a design mistake can create structural problems or an increase in material costs. An omission means leaving something out. That could result in the project not passing inspection.

Failure to Execute a Change Order:

As mentioned, during a construction project your client might want changes. You must incorporate these modifications into your contract. In construction, it is called a “change order,” and all parties must agree to the terms of the change. That’s because it has as much validity as the original contract. In turn if you fail to execute the change order, your client could accuse you of breaching the contract.

Construction Contract Disputes for Delays:

Construction projects often undergo delays. Under a good contract, delays like natural disasters or change orders are excusable. But others — such as a lack of staff or poor scheduling — may be grounds for a client to seek damages. Of course, they must prove you were responsible for the delay. As a contractor, you can dispute claims for delays. If your construction contract does not include language related to delays and how they are handled, your business is left at risk and could end up in a construction contract dispute.

Construction Contract Dispute and Resolution puzzle held in a man's hands

Payment and Collections:

One common dispute involves the collection of payment. As a contractor, you might carry out all the work expected, per the contract. But suppose your client refuses to pay you. They might claim poor workmanship or unforeseen costs. They might not have the money. How you handle this is up to you; however, you can compel them to pay under the terms of your contract. You can impose a lien on the property or pursue litigation.

Workmanship:

As we discussed, a client may question your workmanship. It’s hard not to take it personally, and it can affect your business. To avoid this, include a warranty for materials and workmanship in your contract. The state of Virginia requires a certain standard for quality and workmanship. At the same time, you should also plan for a potential dispute in your contract. This can protect both you and your contractor’s license.

Indemnity Disputes:

Indemnity in a contract helps manage and transfer risk and typically happens between contractors and subcontractors. Home or building owners typically have construction contracts signed between them and you, the contractor. You, in turn, may hire subcontractors to perform certain jobs. What happens if something goes wrong, and a subcontractor causes damage? The owner turns to you when, in fact, it was the subcontractor’s mistake. This is where your subcontractor contract comes into play. It can protect you if your subcontractor refuses to take responsibility for the mistake and resulting damages. Virginia has strict guidelines when it comes to indemnity in construction. It’s important to work with an experienced attorney.

Liability in Construction Contract Disputes:

Property damage is not the only thing you have to worry about on a construction site. Accidents can also happen. A worker may fall from a rooftop, or a piece of machinery could injure someone. No one wants someone injured on the job, but it can happen. Whether it’s property damage or injury, you need to limit your company’s exposure in the event of a lawsuit. This is done with specific language in your contract. In addition, most states require contractors to carry a minimum amount of liability insurance.

Undisclosed or Hidden Conditions affecting Scope of Work/Price:

This is critical. A key part of a construction contract is sharing anything that could affect the scope of work or the price. You can’t see everything behind existing walls or underground. You might uncover things during demolition or construction that can affect any number of things. A crack in the foundation can affect the structure. A homeowner might not have told you they rewired the house themselves. Undisclosed or hidden conditions can have an adverse effect on price and delay construction. That is why it’s important to include this in your construction contract.

It’s true that a construction project can result in many disputes. Still, a good contract — while not invincible — can protect you down the line. In Virginia, the state requires the inclusion of certain provisions in construction contracts. That’s why you need to work with an attorney licensed in your state to draw up a detailed construction contract.

Archangel Law Group can help with Your Construction Contract Disputes

If you are a contractor and need help drawing up a construction contract, Archangel Law Group is here for you! Construction law is one of our areas of focus. As a result, we have the experience necessary to help you out with your contract. We want to protect you from disputes and other difficulties while you’re hard at work on your next project. So, if you’re in Virginia, give Archangel Law Group a call today!

We are proud to represent clients in legal matters pertaining to Construction Law, Business Law, Civil Litigation, Wills, Trusts & Estates, and Traffic Court. Archangel Law Group also provides a cost-effective legal service called Your General Counsel Plan. Ask us about it.

We serve clients in Chesapeake, Virginia Beach, Suffolk, Portsmouth, Norfolk, Newport News, and Hampton. This includes the surrounding counties of Hampton Roads, Virginia. We are here to discuss your specific business plans and answer your questions. Contact our firm at (757) 389-7383, or get in touch with our staff by emailing us.

If you find yourself needing a Construction Law Attorney, contact our firm. (757) 389-7383

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