Construction Law
How to Avoid Contract Disputes
Whether you are a seasoned contractor or are new to the industry, contract disputes are something that everyone should be aware of. Contract disputes are a common issue within the construction industry and stem from any number of factors, including a property owner being unclear on expectations, issues running over on the amount of time estimated for a project, or contractors failing to set clear guidelines for what they will and will not complete.
In order to craft an iron-clad contract, an Orlando contractor lawyer with Cotney Attorneys & Consultants can help. Although an attorney should be involved in every step of contract negotiations and all disputes, the following do’s and don’ts are important to keep in mind as you create your contracts.
Avoid Contract Ambiguity
Contract ambiguity is perhaps one of the most avoidable and simple aspects to address. Making contracts clear and concise is one of the easiest ways to avoid possible disputes. Avoid filling the contract with complicated jargon or unknown terms. Keep the writing clear and straight to the point. By doing this, it will significantly decrease the redundancy and make it easier for both parties involved to understand.
There are two types of contract ambiguity that may become an issue. Patent ambiguity refers to ambiguity that clearly exists on the surface of the contract, and is based on defective or obscure language used in the contract. Latent ambiguity refers to ambiguous, extrinsic, and parol evidence that may lead to the contract being interpreted incorrectly later on.
Ambiguities can be common in construction contracts, and they typically result from a combination of things including:
- Change Orders
- General Conditions
- The Principal Agreement
In order to avoid ambiguity issues, consult an Orlando contractor attorney who will address any potential issues caused by ambiguity in language.
Do Not Rely on a Generic Contract
Sometimes contractors will use a generic contract to try and simplify the process, but it’s better to use a generic contract strictly as a guideline. A generic contract should be updated to accommodate your specific project’s scope of work and the terms of the agreement.
Although they may serve as a good point of reference, a generic contract should only serve as a rough outline for areas commonly addressed. A rule of thumb when drafting your contract’s scope of work, don’t leave out anything. If a dispute occurs during the project and you and the other party end up in a courtroom, if your contract seems incomplete they may veto the use of other documents. This would be a big disadvantage, because other documents you could potentially use, such as pre-bid statements, might be helpful for the case. To avoid having extra documents vetoed, include all of the key terms in your contract.
An Orlando construction law firm will help you prepare a more specific contract for each project while taking into account which aspects you typically prefer to include in your standard contracts.
Address Critical Provisions
Contracts should be drafted with the perspectives of the owner, contractor, and the subcontractor in mind. Owners will generally want to shift more risk downstream whereas contractors will want to limit their exposure to risk. If not careful, subcontractors can end up carrying more risk simply because they don’t want to miss out on a good project opportunity. This perspective of each professional is valid. The key to successful negotiation is to work out a deal that balances the risk among the parties based on their roles and levels of responsibility.
With this in mind, it is important to consider the perspective of each professional involved in the project, which will inform the critical provisions needed. Some of the critical clauses you’ll want to think about include:
- Site conditions
- Liquidated damages
- Change orders
- Contract Terminations
- Indemnification
- Delays
- Warranties
There may be more to consider adding, however an attorney will discuss any additional critical provisions for each specific project.
Defenses for Breach of Contract Disputes
If you have been accused of a breach of contract, there are a few common defenses that your attorney may consider. A few possible defenses include:
- “Impossibility of Performance” which simply means that the scope of a construction project could not be executed due to unforeseeable circumstances that arose during the course of a project.
- Substantial completion, otherwise referred to as substantial performance, is a defense utilized when a contract was so close to being completed that it would be unreasonable for the contractor performing the services not to receive full payment on the contract, pending any damages incurred for non-performance.
- Unilateral or mutual mistakes. In some cases, a contract will be deemed invalid by the courts due to a mistake made by one or both contracted parties. A contract in essence, is an agreement between individuals or entities, so in the case of a mutual mistake, both parties are not clear on the contractual terms.
An attorney will discuss any additional possible defenses and methods to resolve a contract dispute.
Contact an Attorney to Review All Contracts
Of course, the simplest way to avoid contract disputes is to have an attorney review any and all contracts. This can help contractors avoid disputes and if you are accused of breach, the attorney will help gather evidence and craft your defense.
Orlando construction law firms with Cotney Attorneys & Consultants will provide sound legal advice to construction professionals at every level and can assist your firm with any construction need. Not only do we advise our clients on legal matters, but we also provide a myriad of other valuable services for construction businesses, including contract review, employment law advice, and litigation and arbitration services. We also advocate for clients involved in licensing complaints, permitting issues, stop-work orders, business immigration, and more.
If you would like to speak with an Orlando contractor lawyer, 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.