With a vast number of moving parts and many workers lending their skills and services to most construction projects, it can be easy to come into conflict with another working party during a project’s life cycle. In some cases, miscommunication and inconsistencies in information and expectation can lead to a lawsuit. Contractors play a centralized role in construction projects, so it follows that most contractual disputes target them.
In part one, the Tallahassee construction law attorneys at Cotney Construction Law introduced three common reasons why contractors are sued and explored one of these reasons—defective construction work—in detail. Now, we will discuss two other common causes of lawsuits aimed at contractors: breach of contract and fraud.
Breach of Contract
The contract between an owner and contractor drives a construction project forward and ensures that all expectations are clearly stated and understood by both parties. The contractor is responsible for fulfilling the terms in the contract which typically includes costs, timelines, and design plans. When a contractor signs a contract but fails to follow these terms, they are effectively breaching the contract.
An owner can file a claim against a contractor who fails to uphold their side of the contract. This is especially true if a contractor has already collected compensation for a project. In some cases, a breach of contract won’t be discovered until after a building has been completed, but this doesn’t rule out the possibility of litigation. However, in most states, damages are assessed by determining “substantial performance.” In other words, the owner won’t be refunded for the full contract price; instead, they will receive the price established in the contract with deductions to account for the decreased market value of the property. This rule does not apply in cases where the contract is breached before development starts.
As a contractor, it’s imperative that you are forthcoming and honest with all claims made to the owner. False and intentional misrepresentations about your qualifications, abilities, or workmanship can lead to a lawsuit. For example, if you work in residential construction and you profess to using the highest quality materials to build structurally sound homes, when in fact you use substandard materials, you are committing fraud. Another example would be marketing safe homes for families and then building on top of a sinkhole.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.