Common Causes of Construction Litigation
Everyone is afraid of getting sued. It's just what happens when you live in an arguably overly-litigious society. But perhaps in no industry is that fear more well-founded or understandable than in construction. There are a handful of very common causes of construction litigation, mainly involving breaking contractual obligations. Contracts outline what is promised between two parties during a project. If the end result isn't as stated in the contract, or if something goes awry during the project, the affected party may make a legal claim for breach of contract.
While contracts can be a pain, at least they are designed to protect everyone. Speaking of protecting everyone, injuries and accidents are another extremely common way for a construction company to find itself in court. Injuries that occur during construction also cause major disputes, and if it can be proven that the working conditions were unsafe, the owner of the project might find themselves slapped with a lawsuit. While there are a wide array of causes of construction litigation, there are some issues that just seem to come up again and again.
Quality of Construction
Quality of construction is extremely important for a number of reasons. If construction is not up to standard, the building poses a threat to all who enter, and could potentially lead to catastrophic consequences. When an owner finds issues with their finished (or nearly finished) structure, or if it doesn't pass inspections, the blame will likely fall on the contractor, especially if things aren't documented well in daily reports. Perhaps the laborers were not skilled enough, or the materials used were lower quality than agreed upon. There are cases in which the claims can be refuted, such as situations in which the contractor did use the materials discussed in the contract, and the materials proved to be faulty. Either way, a building that is flawed or dangerous clearly needs to be fixed, which means more costs, more labor, and more time.
Delays in Construction
Delays in construction are arguably the most prevalent reasons for strife on jobsites for owners, GCs, and subs. Delays can be caused by weather, permits, materials, labor, safety, noise - the list goes on and on. While they are generally not the fault of the contractor, their written agreement their written agreement can, in some instances, require a completion date, and the contractor can incur penalties for every month or even week after the cutoff. It certainly helps if exceptions for uncontrollable delays are mentioned in the contract before the project's commencement, but when projects are months past their deadlines, disagreements still tend to occur. Things like weather and natural disasters obviously fall under the "out of human control" category, but when it comes to delays in delivery of material, or lags in getting permits, the guilty parties are often unaffiliated with the project's contract, leaving the owner and the contractor in sticky situations.
When general or subcontractors complete a project and the owner does not provide the agreed-upon compensation, the contractors can sue for nonpayment. In addition, in an industry that relies heavily on word-of-mouth recommendations, news will travel quickly and cause a great deal of trouble when it comes to finding contractors for future projects. For most cases of nonpayment, contractors will file what is called a mechanic's lien. These documents go further than just a standard lawsuit, as they become attached to the deed or title of the property, and appear on public records. This means that the property cannot be sold until the liens are dealt with. Unless the contractor has gone against the terms of the contract, the owner of the project is obligated to complete the transaction.
As we know, despite the increase in accident prevention measures and the dropping rate of jobsite injuries, incidents are still occurring on construction sites every day. When a worker gets injured, there are a lot of factors to consider before deciding who is at fault. If the worker intentionally puts him or herself at risk by drinking, taking drugs, or otherwise, they are responsible for their own actions. However, if the worker received inadequate education, or did not receive a toolbox talk about the risks of the particular task that caused the injury, or if working conditions are unsafe, their boss would generally be liable. The issue at hand is, the owner could also risk litigation if there is no clear liability waiver outlined in - you guessed it - the contract.
Lawsuits are a difficult subject to approach, but the reality is, in an industry where litigation is so prominent, awareness of common causes of construction litigation can be extremely useful. Problems can arise at any time, on any type of jobsite, and there are a million and one reasons for disputes, however, overall, the majority of issues involve contractual obligations. On both the project owner and the contractor sides, contracts are often breached, leading to arguments and legal trouble.
Disputes over quality, delays, nonpayment, and injuries are some of the most common causes of construction litigation. Out of these overarching topics can come a slew of problematic situations, including potentially ruined relationships, so this background knowledge is great to keep handy in case of any future debacles.
We know the situation out there looks bleak: more and more companies are getting sued with no end in sight. But the good news is that if you take just a few simple steps, you can protect yourself, your crews, and the entire business from a devastating lawsuit.