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Ramsey Legal Blog

Elements of a construction contract you should know about

The weather in our region is expected to get better very soon, even though meteorologists have been promising that spring will actually be here for soon for the past couple weeks. Whatever the weather has in store for us in the coming week, one thing is for certain, once the weather clears, construction projects will begin in earnest. The same will likely occur for the planning of future projects.

For those who are in the planning stages, the wording of a construction contract is critical. Not only will the contract dictate the time frame and the pace of completion, it could also serve as the basis for any legal remedies. Because of this, we will highlight a few construction contract provisions that of which entities should be wary.

What to consider before initiating a lawsuit

Perhaps the most important goal to be reached with a construction contract is establishing strong, yet flexible expectations regarding completion deadlines. Having these in mind at the outset can help avoid cost overruns and other minor issues that can give rise to major disputes and consequential damages.

While many may strive for the ideal, resolutions may not be easily reached after a breach. When this happens, construction companies (and the entities who hire them) must make sound business decisions when it comes to filing suit to recover damages. Basically, a lawsuit must make good economic sense before it is filed.

More drones being used to make safety inspections

Whenever we hear about drones in the media, more often than not they are cast in a negative light.  We commonly hear about drones flying too close to airplanes or being used to spy on people, and that's before the injuries to unsuspecting children.

However, despite the disdain for drones and the potential danger to others, there is a growing market for drones in the construction industry. This post will briefly explain why.

Seeking restitution through construction litigation in New York and New Jersey

Prior to beginning a new project, construction companies in New York and New Jersey often seek to form a plan to ensure that the project proceeds smoothly.  Of considerable concern to contractors are the high costs that are associated with delays.  However, even with a well conceived plan, delays still occur and inevitably lead to heated disputes that windup in litigation or arbitration.

In one such case, a construction company filed a lawsuit against the State University of North Dakota in which it sought $1.3 million to cover additional costs caused by delays.  The construction company in that case asserted that the delays were the result of flaws in the design of the project.  As a result of the delays, it was forced to accelerate its work to accommodate an upcoming dedication ceremony. 

Construction law: Company involved in dispute over payments

In large scale projects, construction companies in New York and elsewhere may choose to enlist the services of a contractor. These arrangements generally include a contract stating the terms of the arrangement and how to proceed should any disputes arise. One common area in construction law where such disputes could occur pertains to issues with payments, and such topics can be hotly contested.

According to reports, a construction company in another state is currently involved in such a dispute. A contractor who was hired by the company to work on a bridge replacement project claims it hasn't received payment for work performed. A county commissioner in the area says he has received quite a few complaints related to the issue, and states that numerous individuals who work for the contractor have allegedly gone months without being paid.

Construction law: Why disputes arise and how to handle them

Construction companies in New York and elsewhere may consider it vital to plan extensively prior to beginning a new project. However, forming a strategy that covers every possible scenario can be a challenging task, and any changes to the initial plan could be met with opposition. Should any disputes arise, a company may find it helpful to speak with a construction law attorney for guidance on how best to pursue an acceptable resolution.

Construction disputes can occur under a variety of circumstances, ranging anywhere from a delay in the projected completion time of a project to a disagreement concerning the terms of the initial contract. These issues can be exceedingly complex, and can further disrupt project schedules until resolved. While a construction company may seek to prevent similar concerns by being thorough during project planning, in some cases, avoiding a dispute could be nearly impossible.

Construction law: The elements of a construction contract

Many construction companies in New York and New Jersey take on multiple projects each year. Upon reaching an agreement for work with another party, it is generally advisable to put the terms of the agreement in writing with a formal written contract. Because construction contracts can be exceedingly complex, contractors should speak with someone with experience in construction law to ensure that all necessary clauses are included.

One of the first topics to cover in a Construction Contract pertains to the nature of the work required. Listing a detailed description of the work (i.e., a "Scope of Work") will better ensure that a contractor is not required to perform free work. A clear Scope of Work also makes it easier for a contractor to seek change orders for extra work. Finally, a clear Scope of Work makes it easier to prepare a fair and equitable Schedule of Values so that a contractor can be properly paid for its work as the project progresses.

A good Construction Attorney can help with the preparation of a detailed Scope of Work, but it is the contractor that must be prepared to dedicate the time to ensure that the Scope of Work is accurate.

Revise your contract's Mediation Clause

Most Mediation Clauses simply state that the parties to a dispute will use good faith efforts to settle that dispute with mediation. Sometimes the clause will also set forth the person/entity that will act as the mediator (for example, the American Arbitration Association clause). Other clauses state that all binding disputes will be stayed for a period of time while mediation progresses (for example, AIA A201-2017 §15.3.2). However, the most important point that is rarely, if ever, set forth in a Mediation Clause is the requirement that decision makers be required to attend and participate in a mediation. It is true that a good mediator may mandate that decision makers attend the mediation, but why take that chance? Instead, modify your Mediation Clause for each of your projects to list the persons that have decision making responsibilities. Then, just in case that person(s) leaves the project, also list their job title separately as an alternative. Thus, your revised clause will read, "John Doe and/or the Project Executive will be required to attend and participate in all mediation sessions."A good construction lawyer can assist you with drafting a well-written mediation clause that allows claims to be resolved amicably and business relationships to continue.

How a construction dispute can be resolved through mediation

A contract dispute can be incredibly frustrating for anyone working in the construction industry. If the dispute escalates to litigation, it can become time-consuming and expensive for all parties involved.

If you find yourself in the midst of a dispute that looks like it may become litigious, you can prevent ever stepping in the courtroom by working with a construction mediator. Mediation is a voluntary process in which all parties work with a professional who assists them in resolving their conflicts, and it is often successful.