Construction projects consist of construction work on buildings (including residential homes and commercial buildings). These projects also include public works projects (including roadway, highway, and bridge construction). Building construction consists of commercial construction and industrial construction. Commercial construction involves construction of buildings such as shopping malls and centers, or other commercial centers.
Industrial construction involves construction on buildings at which manufacturing work is performed. The scope of construction projects is governed by construction contracts. Construction contracts spell out the legal rights and responsibilities of building owners, architects, and builders.
Construction contract disputes can arise over several issues. These include:
- The precise work scope or specifications: Here, the builder/contractor and the owner may have a dispute over the specific work requirements the builder must follow. The dispute may also pertain to the quality or cost of the construction materials. The dispute may involve when the contractor must complete the work by.
- The role and function of the architect: During a new construction process, an architect may work hand-in-hand with the builder. The architect may interpret drawings and plans for the builder. Architects work with a builder to ensure a specific level of quality and design,
- The suitability of a subcontractor: Subcontractors are hired by the builder. They are hired to perform a specific task. Sometimes, a builder may try to substitute one subcontractor for another. The contract between the builder and owner may not allow for this.
- Construction defects: Construction defects include design defects and manufacturing defects. If, due to a defect, a laborer or member of the public is injured, the construction company and/or any subcontractors may be liable. They may be liable under a negligence theory, premises liability theory, or breach of contract theory.
- Employment-related disputes: These disputes involve proper payment of employees, subcontractors, and independent contractors.
What are Some Common Construction Dispute Remedies?
There are remedies for construction disputes. There may be disputes related to work scope, timeliness or specifications. The issue may be whether work was performed using suitable materials, whether the work was timely performed, or whether the work was performed error-free.
The construction contract outlines what constitutes timely performance, error-free performance, and “suitable materials.” A party may allege the materials used to complete the building did not meet local building codes. The other party can defend itself by pointing to the contract. They may point to the provision stating what materials were needed to “meet code.” By showing those materials were used, the party can defend against a breach of contract claim. The parties may choose, in the construction contract, to have disputes resolved by mediation or mutually binding arbitration. They may choose to use these dispute methods in lieu of filing a lawsuit. If the contract permits a lawsuit, the suing party must prove the contract was breached.
In resolving disputes related to what percentage of the work has been completed, courts rely on a legal concept known as substantial performance. Under the concept of substantial performance, sued for breach of contract is still entitled to be paid, provided that party substantially performed their work under the contract.
To have substantially performed, the party must not have committed a material breach. A material breach is a breach of a significant term. For example, a contract may require that the hallways be painted beige. If the builder paints the hallways gray, the builder has not “substantially performed.” The contract requires one specific color, and the builder completely breached this requirement.
Sometimes, a court will find someone has substantially performed. A builder may have completed the carpeting work for 99% of the building. They may not have timely carpeted the remaining 1%. Under these circumstances, the builder has substantially performed. The builder is entitled to payment for the value of their work. The owner may pay someone to carpet the remaining one percent. The owner may sue for the cost of this extra work. The owner may not “stiff” the original builder. The original builder substantially performed.
There is a condition under which the “substantial performance rule” does not apply. The contract may state that specific and complete performance is required as a condition of payment, If the builder has not specifically and completely performed, the builder cannot use “substantial performance” as a defense.
Remedies other than damages for breach of contract include:
- Court orders that order a party to stop construction. These orders are called injunctions. A court may issue an injunction when the construction interferes with someone’s legal rights. For example, construction may cause damage to someone else’s property. That person may apply for an injunction.
- Court orders that direct one party to perform per the contract terms. A party may obtain an injunction that orders the other party to do something. The “something” may be to use specific materials called for in the contract. A party may also obtain an injunction that orders repair of defects. A party cannot “force” the other party to perform under an injunction. A party may seek damages for the other party’s failure to do so. For example, a party may refuse to comply with an injunction ordering a defect repair. The other party may sue for the costs of repair it incurred by having to use a different contractor to make the repair.
- Damages as a result of one party’s negligence. An architect or a builder may negligently perform work. As a result, someone may sustain injury. Property may be damaged. An individual may sue the architect or builder for injuries or property damages. The lawsuit is based on a negligence theory.
What if I Have a Construction Dispute?
An individual who hires a builder to perform construction work may find the construction work unsatisfactory. Before the individual attempts to mediate, arbitrate, or litigate, the individual should be prepared to state the specific work item that was not satisfactory (e.g., was the wrong color paint used? Was the plywood not at the level of thickness called for in the contract?). The individual should keep documentation of communications with the builder, of progress under the contract, and of instructions given to the contractor.
The individual should also take photographs or video footage of the building and construction site to document specific deficiencies. The individual should also retain any statements of work, as well as copies of all invoices submitted by the builder to the individual.
For employment-related disputes, owners should keep logs and documentation showing that workers were properly classified, either as employees or as independent contractors. Owners should also keep payroll records showing that wages (including minimum and overtime wages) were paid, as appropriate.
A builder whom an individual may sue for alleged subpar subcontractor performance should keep documentation of the subcontractor’s work. This documentation can include invoices, progress reports, communications between the contractor and subcontractor, as well as photos and videos of the work as it progresses.
Do I Need the Help of a Lawyer with Construction Dispute Issues?
If you have a dispute related to a construction contract, you should consult with a real estate attorney. An experienced real estate attorney can advise you as to your rights and as to how to proceed. If the dispute involves an employment law issue, you should contact an employment lawyer near you. If the dispute involves personal injury, you should contact a personal injury attorney,