Construction Contract Disputes

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.

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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.

About the Author

James F. Woods is Founder and Managing Partner of Woods Lonergan. He has tried more than 60 jury cases to verdict as first-chair trial counsel, beginning his career as a prosecutor, and resolves complex commercial and real estate disputes valued at $1M to $100M+ for business owners, principals, and middle-market enterprises across the New York metro area. He appears regularly in the New York Commercial Division and in the federal district courts for the Southern and Eastern Districts of New York, and has argued appeals in the Appellate Division and the Second Circuit.

His practice covers complex commercial litigation, real estate and asset litigation, partnership and shareholder disputes, fiduciary breach and corporate fraud, and cooperative and condominium governance. He counsels corporate and cooperative boards throughout New York.

The Legal 500 United States ranks James in its New York Elite rankings for Commercial Disputes, and his peers have recognized him with Martindale-Hubbell's AV Preeminent rating. Woods Lonergan is ranked in Chambers USA: Spotlight New York for Litigation: General Commercial and Real Estate. James serves on the Commercial & Business Litigation Committee and the Business Torts & Unfair Competition Committee of the American Bar Association Section of Litigation, and on the Cooperative & Condominium Law Committee of the New York City Bar Association. His commentary on New York commercial and real estate disputes has been quoted in The New York Times, The Washington Post, Bloomberg Law, Law360, and Forbes.