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Common Issues Arising Under Construction Contracts

Construction projects are intricate undertakings, and even the most meticulous plans can encounter unforeseen issues. These challenges often surface in the form of disputes arising from the contract itself. Here are some common sticking points and methods for dealing with them.

One frequent source of contention stemming from construction contracts is whether the work was completed “substantially” according to specifications. While minor deviations may occur, the project’s core function and purpose must be met. Courts typically consider factors such as the nature of the defect, its impact on usability and the cost of correction. To mitigate disputes, there should be clearly defined performance standards in the contract.

Construction rarely operates on a perfect timeline. Delays can be caused by factors beyond the contractor’s control, such as adverse weather or unexpected site conditions. Well-drafted contracts should outline acceptable reasons for delays and the process for claiming extensions. Open communication and timely documentation become essential for both parties in such scenarios.

Warranties regarding the quality of work are another potential battleground. Contracts often specify warranty periods during which the contractor and subcontractors must rectify any defects. However, discerning the cause of a problem can be tricky. Was it faulty materials, improper installation or normal wear and tear? Detailed records of materials used and clear warranty terms for both contractor and subcontractors help establish accountability.

Subcontractors play a vital role, but their substandard performance can leave the main contractor holding the bag. While a general contractor can’t guarantee a subcontractor’s work, exercising due diligence in their selection can minimize the risk. The contract should stipulate the contractor’s right to approve subcontractors and ensure they carry adequate insurance.

Payment schedules are a cornerstone of any construction contract. Typically, contractors receive progress payments tied to project milestones. However, owners may withhold payment if they believe the work falls short. To avoid cash flow disruptions, the contract should clearly define payment terms and the process for resolving disputes concerning withheld payments.

Addressing potential breaches of contract is where well-defined remedies become vital. Mechanic’s liens, for instance, allow unpaid contractors to file a legal claim against the property itself. This incentivizes timely payments. Liquidated damages clauses can pre-determine compensation for delays caused by the contractor’s negligence. These provisions offer a roadmap for resolving breaches and minimizing financial losses for both parties.

Construction contracts are a delicate balance between clear expectations and flexibility to handle unforeseen circumstances. An experienced Phoenix construction contracts attorney can anticipate potential issues and outline clear procedures for addressing them, helping owners and contractors get over the inevitable bumps in the road more effectively.

Law Offices of Donald W. Hudspeth, P.C., represents a diverse group of clients in cases stemming from construction contract issues. To schedule a consultation with a knowledgeable lawyer, call us at 866-696-2033 or contact us online to set up a consultation.

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Donald W. Hudspeth
Principal Attorney

Attorney Donald W. Hudspeth has more than twenty years’ experience practicing corporate and business law. Before attending law school, Mr. Hudspeth held a stock brokers license at the age of 21 and owned his own business at the age of 23. He was a business law professor at Arizona State University, West Campus, and has conducted classes and seminars for a number of higher institutions and organizations. Mr. Hudspeth has published two books on law and is the founder of the radio programs Law on the Edge and Law Talk.

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Mark S. Hamilton

About Attorney Mark S. Hamilton has experience handling all aspects of civil and commercial litigation in federal, state, and tribal courts at the trial and appellate levels. Practice Areas Business litigation Commercial litigation Education University Of Hawaii Wm. S. Richardson School Of Law, Juris Doctor - 2002 University Of Hawaii, Master Of Arts in Asian…

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