Our firm represents both the construction trades (contractors, sub-contractors, material suppliers and designers) and property owners. We have over 25 years of substantial experience in the enforcement and defense of construction liens, contract or performance disputes and damage claims arising from defective performance or materials and payment issues.
One of the most important elements of construction law is a thorough review of all the agreements with the owner, contractor, or in the case of a subcontractor, its subcontract and the prime contract. The contract is likely to contain important terms regarding dispute resolution and applicable conditions precedent to filing a lawsuit. These may include time limitations and specific procedures for the submission of claims to the general contractor and/or owner before legal action may be commenced. Because parties may incorporate by reference certain portions of a prime contract in a subcontract, review of the prime contract is also essential to locate any mediation provisions or other conditions precedent to litigation or arbitration, which may apply to a subcontractor. Moreover, one should pay attention to the applicable timeframes for claims and observe them. Contractual provisions may also provide guidance as to the choice of law provisions or venue for disputes.
Is the Project Bonded?
Some construction projects may call for payment bonds and/or performance bonds that benefit contractors and subcontractors and provide an avenue of recovery. A payment bond generally runs in favor of subcontractors and suppliers and obligates the surety to pay outstanding amounts owed to the subcontractor if the general contractor fails to fulfill its payment obligations. A performance bond generally runs in favor of the owner and/or general contractor and provides a remedy in the event of subcontractor or contractor nonperformance or defective performance.
Once a copy of the bond has been obtained, it is critical to identify and comply with all notice and timing requirements set forth therein. In the private project context, the bond often dictates the timeframe within which a claim must be asserted and/or an action on a bond must be filed.
Do Other Provisions Dictate the Contractor’s Rights?
The contract will likely contain notice provisions. The timing and form of notice dictated by the contract should be strictly observed. Contracts may also contain indemnification and insurance provisions that should be analyzed to determine if any additional remedies in the form of indemnification or insurance coverage. Similarly, contract provisions related to limitations on liability (i.e., caps on liability or waivers of consequential damages) should also be identified immediately to determine whether the applicable law will enforce such limitations on liability and manage the client’s expectations on the type of recovery available.
Who Are the Potential Parties to Litigation?
Another step in evaluating a client’s potential claims and determining a course of action is identifying the party or parties from whom the client may recover. In some jurisdictions, an aggrieved contractor and/or subcontractor may have the right to pursue claims against not only those with whom they have contracted, but also entities with which they are not in direct contractual privity.
What Type of Experts Might Be Necessary?
It is also important to identify the areas in which expert opinion may be required and the potential experts early in the evaluation process. Experts can assist in the initial recommendations to clients on the strength of the claims, provide assistance in preparing discovery requests, and educate practitioners and clients on relevant issues and industry standards.
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