Construction projects often involve multiple stakeholders with various responsibilities and expectations who may come into conflict due to miscommunication, disagreement, and eventual disputes between these participants.
Acknowledging the root causes and solutions available to address construction disputes is an essential first step toward mitigating them, helping your project stay on schedule while decreasing the likelihood of costly disputes down the road.
1. Breach of Contract
Contracts provide the legal basis for construction projects. If one party breaches their agreement in terms of fulfilling what was outlined in their contract, this could lead to disputes between both parties involved.
Legal action often involves proving fault and damages. Money-related disputes might include unpaid invoices, unexpected costs or delays that affect other parts of a project’s completion timeline. Delays might also arise from schedule disruption; legal proceedings typically focus on this area as well.
Construction defects are defects that disrupt a building’s functionality or present potential hazards to people occupying it, whether structural or nonstructural in nature.
Some defects are immediately noticeable; others may emerge months or even years later. Recognizing whether a latent defect exists is key for establishing when and how soon it should be filed as part of a claim.
Design defects in structures or systems may result in costly repairs and even injuries, potentially giving rise to negligence-construction defects lawsuits.
3. Defective Equipment
Sometimes disputes may arise because equipment used during construction fails to function as expected, leading to breaches in contract and potential disputes between parties involved. If this equipment does not conform with certain standards or specifications, those using it could face liability for breach.
Many contracts include warranties or call-back remedies which obligate contractors to correct defective work after notice is given. Although warranties can exist independently from contracts, they generally adhere to similar legal principles.
4. Subcontractor Misconduct
Contractors should make sure that they understand exactly what is expected from them before beginning any project, otherwise misunderstandings may lead to claims and disputes.
Arbitration is often chosen as the preferred dispute resolution strategy in construction disputes, providing a neutral third-party to examine all relevant details and help both parties find common ground.
Damage claims often result from unpreventable events, including weather-related problems and material shortages beyond your control. Therefore, it is imperative that any such events are documented.
5. Defective Materials
Construction projects involve many individuals and complex processes, which may give rise to disputes between those involved.
Builders must ensure their work meets plans and specifications efficiently; should this fail, they could face legal implications.
Failure to use proper materials or inspect for defects could constitute negligence, with damages dependent upon whether a claim is based on contract law or tort law.
6. Defective Workmanship
Faulty workmanship claims are one of the primary sources of construction disputes, often occurring when someone alleges that completed works did not conform to certain standards, such as safety requirements or “good and workmanlike” practices.
These lawsuits frequently involve multiple defendants, such as the builder or contractor, subcontractors and design professionals. Damages can be substantial; pinpointing who’s to blame can be tricky.
7. Poor Site Conditions
Building and remodeling projects are complex endeavors that often involve significant financial commitment and time spent working towards their completion, which increases the chance of disagreements arising during these projects.
Construction companies can lower the risk of expensive and lengthy litigation by taking proactive steps to prevent and resolve disputes, with our experienced attorneys offering guidance for doing just that. They also assist clients in the drafting of contracts as well as exploring legal solutions should any arise.
8. Unreasonable Delays
Time truly is money in construction projects. Delays can have serious repercussions for budgets and stakeholder relationships alike.
Contractual obligations vary for contractors when it comes to recovering actual and liquidated damages for delays, as well as whether or not they can request time extensions. Be wary, however, of clauses in their contracts which require them to waive their claim for delay damages by accepting final payment as they could end up forfeiting such rights altogether.
According to the 2020 Arcadis Construction Disputes Report, nonpayment is one of the primary causes of construction industry disputes. This could be due to pay-if-paid or pay-when-paid clauses in contracts or lack of clear communication processes.
Jumping right to litigation may not always be the best approach, since it can damage relationships and cost both sides money. Instead, contractors should explore alternative dispute resolution methods like mediation or arbitration as a more viable path.