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Worst-Case Scenario: The Construction Contract

General contractors and subcontractors alike can find themselves in a difficult position as a result of their construction contracts. When delays, defects, and disputes emerge on a project, it’s your contract that will determine the outcome. Unfortunately, many contractors fail to prepare for the worst by failing to acknowledge the weight of these all-important documents.

In this article, we discuss how having a poorly negotiated and drafted contract can lead to a worst-case scenario, a situation in which your company is left powerless in the face of nonpayment or litigation. If you are concerned that your contracts aren’t up to par, our experienced attorneys are standing by to review contracts in Colorado Springs

Powerless 

As a Colorado Springs construction law firm, we’re all too familiar with the plight of contractors. In an industry plagued by cash flow issues and bankruptcy, contractors are often left without payment and without the means to fight for it. Your contract should contain detailed stipulations that outline project expectations, payment amounts, and payment schedules. Furthermore, your contract must protect your right to payment. Have you reviewed a contract to determine if it contains a “pay if paid” clause? What about if it waives your lien right? Both clauses are perfectly viable in the State of Colorado and must be approached with caution. 

Related: “Pay When Paid” Clauses in Colorado

Worst-case scenario: you are left without payment and without any means to secure it. The mechanic’s lien is one of the most important tools at your disposal for securing owed payment, and you must protect it at all costs. 

Held Liable

Even more damaging for contractors and subcontractors than nonpayment is the possibility of being held liable for costs and damages that they had no involvement in. This is an unfortunate reality in Colorado, where contractors can be required to “hold harmless” owners in indemnity provisions, contract clauses that shift risk from owners to contractors. Despite the state’s anti-indemnity statute, contractors can still be held liable in certain situations. 

Attorney’s fees are another major concern. While parties are generally responsible for their own attorney’s fees in the United States, attorney’s fees may be awarded to the prevailing party in Colorado if the contract provides for it. These are just some of the many considerations that contractors working out of the Centennial State must be mindful of. 

Related: Which Contract Documents Can a Construction Lawyer Review? 

Worst-case scenario: your company is forced to pay for damages or exorbitant attorney’s fees as a result of misleading contract language. Few construction companies can absorb these costs and continue functioning. This is just one of the many worst-case scenarios that can be avoided with the assistance of an attorney experienced in Colorado Springs construction law

If you would like to speak with an attorney who can review construction contracts in Colorado Springs, please contact us today.

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.