A white background with a few lines on it

Top 10 Issues with Construction Contracts

Bennett Legal Group • January 22, 2024
A construction site with blueprints and tools on the ground.

The construction industry is full of risk. This can be seen in how each party handles the risks they are assigned by contract. It also affects you as an investor or lender. If your loan goes south due to missed deadlines and budget overages! Construction loans typically carry higher interest rates than other types. There is also more potential cost associated with delays caused by shoddy workmanship. Make sure that everything gets done on time (and according to their plan) beforehand, rather than waiting until after things get really expensive.

The contracts, such as building contracts , into which a party enters with other parties involved in the construction project are some of the most important risk management tools available. The bulk of the risk is assigned through indemnity and insurance requirement clauses in the contracts.

The risks of construction projects can be reduced by following many good business and building procedures. Such as thorough preconstruction planning, proven construction methods and techniques, the use of skilled experts, and strong safety programs. As well as careful contract preparation and monitoring.

Request A Consultation

Investigate the available legal avenues for pursuing your construction claim

When it comes to resolving disputes in the construction industry, suing is just one of many legal options available. Seeking legal advice early on is key to potentially avoiding a costly courtroom battle.

Acting quickly to address any problems can prevent small issues from snowballing into full-blown disputes or legal claims. In fact, many disputes can be resolved through alternative methods like mediation or arbitration, which are often more practical and cost-effective than traditional litigation. So, if you’re facing a construction-related dispute , don’t hesitate to seek legal help and explore your options for resolution.

Common Issues in Florida Construction Contracts

  1. Changed Conditions
  2. Delays
  3. Incomplete or Defective Work
  4. Termination for Default
  5. Liquidated Damages
  6. Warranties
  7. Insurance
  8. Indemnification
  9. Assignment and Subcontracting
  10. Dispute Resolution Mechanism

Changed Conditions

A contract is a contract, right? Not always! The definition of a changed condition may be very broad in some contracts, while others are specific about what qualifies as a changed condition. For the contractor, any event that alters the work they were originally hired to do can be categorized as a changed condition- meaning more time and money spent on the project, and possible disputes down the road. For the owner, a change in site conditions (such as an unexpected flood) can mean increased costs for the project.

Delays

Contractors often work on several projects at once, and things like bad weather or late material deliveries from suppliers can delay one job while pushing others ahead. This can cause contract disputes if one party feels they are being unduly penalized for circumstances that are out of their control.

Incomplete or Defective Work

Building a quality product is of utmost importance. Unfortunately all too common for contractors to cut corners in order to save time and money. When this happens, the owner may contract another party to come in and finish the job. Of course, this is at additional expense to them. Or, the owner may hold the contractor liable for the defective work and seek damages.

Termination for Default

This occurs when one party to a contract breaches its terms in some way, and the other party is allowed to terminate the contract and sue for damages. It’s one of the most severe consequences a party can suffer under a contract.

Liquidated Damages

These are damages that are pre-determined by the contract as an estimate of what will happen if there is a delay or other breach. They’re meant to be a punishment for the offending party. Sometimes they’re not enough to cover all of the losses suffered by the non-breaching party.

Warranties

A warranty is a guarantee from the contractor that the work will be done according to certain standards, and that any defects will be fixed free of charge. They’re typically given for a set period of time after the project is completed.

Insurance

No one goes into a construction project thinking something will go wrong. Unfortunately, accidents do happen. That’s why it’s important for both the contractor and owner to have insurance in case something does happen. The contract should specify who is responsible for what type of insurance and what happens if one party doesn’t have adequate coverage.

Indemnification

This clause assigns responsibility for damages (caused either intentionally or unintentionally) to one party. It can be a way of protecting the other parties involved in the contract, but it can also lead to a lot of disputes if things go wrong.

Assignment and Subcontracting

When one party to a contract assigns their rights and responsibilities to another party, it’s called subcontracting. It can be a way for the contractor to get out of a contract they no longer want to be part of, or for the owner to bring in additional help if needed. But it can also lead to disagreements about who is responsible for what.

Dispute Resolution Mechanism

This is the process by which contract disputes can be resolved. It can be anything from arbitration (a process where an impartial third party hears both sides and makes a decision) to litigation in court. Whichever mechanism you decide to chose, know it’s important that it be spelled out in the contract so there are no surprises later on.

These are just a few of the most common issues that can arise in construction contracts. By knowing what to look for before signing a contract, both parties can avoid costly disputes down the road.

Different Types of Construction Delays

One frequent cause of construction delays is Acts of God, such as floods, fires, or other natural disasters that affect the construction site. These delays are often beyond the control of the contractor or property owner.

  • Owners may cause another type of construction delay when they make revisions that impact the project’s timeline. This can occur if the owner introduces changes to the project after contract signing or adds new requirements that were not part of the original agreement. Such revisions are relatively common and can cause delays in completing the construction project.
  • The unavailability of materials is another type of construction delay that can occur when materials are in short supply or need to be shipped from a distant location. In some cases, the unavailability of materials may cause excusable delays, which can delay the construction project.
  • Construction delays can also result from labor disputes, which may occur between contractors and workers or different unions. Unfortunately, in some cases, these labor disputes may be beyond the control of the contractor or property owner, resulting in unavoidable delays in completing the project.

Can You Cancel a Construction Contract in Florida?

In Florida, cancellation of a construction contract is possible under certain circumstances, as outlined by Florida Statute 520.72. This statute mandates a 3-day rescission provision for specific home improvement contracts. Both parties involved in the contract have the right to cancel within three business days following the contract’s execution. The three-day period is calculated from the contract’s execution and extends until midnight on the third business day. Notably, weekends and holidays are not counted in this timeframe.

The cancellation process requires the party invoking this right to provide notice to the other party via certified mail or registered mail. While these are the primary methods, alternative notice methods such as email, fax, or overnight delivery may also be used. It’s advisable for homeowners to consider multiple communication channels, given the potential time constraints of mail delivery. Importantly, a homeowner who properly cancels the contract within the stipulated timeframe is not liable to the contractor for any damages resulting from the cancellation.

Home improvement contractors should be aware that specific contracts may necessitate providing a 3-day rescission notice to the homeowner, as required by Florida law. Even if not explicitly required, contractors may choose to offer this notice as a customer accommodation.

Contact A Skilled Construction Contract Attorney in Florida

Contracts are essential for any construction project, but they can also be tricky to navigate. There’s a lot of legalese and jargon that you may not understand at first glance – one small mistake could lead to major consequences down the road.

A Florida Construction Lawyer at Bennett Legal Group can help ensure your contracts cover all bases, so there aren’t any surprises when it comes time to settle up on both sides. They’ll save you from headaches in court by making sure your contract is airtight before work begins! If you’re looking for some more tips on how to avoid lawsuits.

Request A Consultation
A man wearing a hard hat is shaking hands with another man.
By Bennett Legal Group April 24, 2024
Florida construction contractors have been busy in recent years, which is great news for profits. However, with many contractors accepting numerous residential, commercial, and industrial projects, it can become confusing when having to manage different contract types. Understanding what the legal rights and obligations specific to each type of contract are can be a [...] The post Types of Construction Contracts Recognized in Florida appeared first on Bennett Legal Group, P.A..
A scale a house and an hourglass on a white background
By Bennett Legal Group March 25, 2024
The Construction Lien Law in Florida authorizes parties who provide labor and materials for construction contracts, and professional service providers, such as architects, landscapers, engineers, interior designers, and land surveyors to file a lien as security for payment. The law also protects the property owner from paying a general contractor over the original agreed [...] The post Understanding the Operation and Enforcement of the Florida Construction Lien Law appeared first on Bennett Legal Group, P.A..
A yellow hard hat and a judge 's gavel on a wooden table.
By Bennett Legal Group February 26, 2024
Construction contracts in Florida should clearly outline the rights and responsibilities of each party during a building project. Generally, most eventualities are covered by a well-drafted contract, but contractor disputes do sometimes arise. A property owner may be unsatisfied with a contractor’s work, professionalism or adherence to the terms of the contract, for instance. [...] The post Filing a Complaint Against a Contractor in Florida appeared first on Bennett Legal Group, P.A..
A model house is sitting on top of a blueprint on a table.
By Bennett Legal Group January 31, 2024
During residential construction projects in Florida, disputes of many types may arise. If these are not settled during initial discussions, homeowner claims against construction contractors can be imitated. The claim is usually due to the party seeking compensation (or other relief) because of work that does not meet the terms of the contract they [...] The post What You Need to Know About Residential Construction Claims in Florida appeared first on Bennett Legal Group, P.A..
A judge 's gavel is sitting next to a hard hat and safety goggles.
By Bennett Legal Group December 21, 2023
Construction disputes are relatively common within Florida’s construction industry, which remains robust and flourishing. Disputes can lead to construction litigation, a complex legal process that can become quite daunting for property owners, contractors, subcontractors, or whichever parties are involved in the dispute. It’s important to understand what’s involved in construction litigation in Florida and [...] The post What You Need to Know About Construction Litigation in Florida appeared first on Bennett Legal Group, P.A..
A 3d model of a building under construction with cranes and blueprints.
By Bennett Legal Group November 28, 2023
If a mechanic’s lien is placed on title in Florida, it means that the property owner cannot sell or refinance the home. It’s essential to understand why a mechanic’s lien may be placed on a home, what you can do to remove it, and how to avoid the potentially crippling costs of construction litigation. [...] The post Mechanic’s Liens on Your Title in Florida appeared first on Bennett Legal Group, P.A..
Two men are shaking hands over a wooden table.
By Bennett Legal Group October 23, 2023
“Substantial compliance” is a term frequently used in contract law in Florida and other states. Under Florida construction law, the term generally refers to a situation where work has been completed to a good enough standard to not constitute a breach of contract. For construction projects, there is a recognition that “close enough is [...] The post What is Substantial Compliance in Florida? appeared first on Bennett Legal Group, P.A..
A computer generated image of a city with lots of buildings and trees.
By Bennett Legal Group October 5, 2023
Preventing real estate disputes should be a priority in every commercial construction project but even the most professionally drafted contracts can run into issues. Legal disputes can be tough for both budgets and timescales of construction projects. Disagreements should be dealt with promptly and workable solutions found, with litigation generally considered a last resort. [...] The post Common Causes of Commercial Real Estate Disputes in Florida appeared first on Bennett Legal Group, P.A..
A hard hat , bricks , blueprints , and a level are on a wooden table.
By Bennett Legal Group August 8, 2023
The signing of contracts is a basic element of construction projects, and contract breaches occur when one of the parties partly or wholly fails to fulfill the obligation(s) described in the contract. With construction projects, the stakes are generally high and contracts can be lengthy and complex, so a breach of contract can have [...] The post Remedies for Breach of Contract in Construction Law appeared first on Bennett Legal Group, P.A..
A man is sitting at a desk with his head in his hands.
By Bennett Legal Group July 20, 2023
With the high stakes at play in public construction contracts, bid protests and disputes are relatively common among contractors in Florida.Bidding is critical to the success of a construction business and being adversely affected by an erroneous, unfair, or biased decision can impact the financial security of contracting companies.If you intend to challenge the terms, [...] The post Bid Protests, Bid Disputes & Public Contracting in Florida appeared first on Bennett Legal Group, P.A..
More Posts
Share by: