Combating Claims of Breach of Contract
After all the negotiations and the commencement of a construction project, feelings between both parties are typically at a high point. The construction company knows it has just signed a deal that will make money, and the contractee knows they have just taken the first step to meet a need. In a perfect world, the construction will go as planned, the construction company will be paid, the contractee will have met a need, and all parties will be in a good position. However, in reality, this is not always the case. Issues that cause problems may arise, delays may occur, and the parties may not see eye-to-eye on every issue. At some point, the contractee may sue for breach of contract. The construction company should employ the services of an experienced construction law firm to ensure that their interests are protected, and that their work does not go unpaid. Recently, in North Carolina, a town settled with a construction company following a two year lawsuit, in which claims of breach of contract were alleged by both the construction company and the town. Given the complexities of contract claims, it is crucial to have an experienced construction law attorney examining the merits, from the beginning, who knows every detail about the construction contract so that he/she can effectively argue on a contractor or other responsible party’s behalf. A discussion of breach of construction contract claims, as well as some suggestions as to how to combat them, will follow below.
Breach of Contract
A breach of contract occurs when a party fails to perform an action (or performs a prohibited action) required by an agreement. Additionally, a breach of contract may occur when a party communicates its intent not to perform a required action, as well as when a party cannot perform a required action. Generally speaking, breaches may be minor or material.
Minor breaches are contractual breaches of a provision that are not specified as an essential condition in the contract. By way of example, in a contract for the construction of a lighted walkway, in which a contracting party required the light posts to be painted black, and the other party painted them gray, this would most likely be considered a minor breach, as the color of the light posts does not affect their function. In minor breaches, the recovering party is only permitted to recover actual damages, and will not be able to compel repainting of the light posts.
Material breaches, by contrast, are breaches of an essential condition of a contract. A condition is considered essential if the condition was of such importance to a contracting party that it would not have entered into the contract without being ensured of the strict performance of that condition. This is an objective analysis of the parties’ intention at the time the contract was created. Returning to the example above, if black light posts were required to comply with a town’s (or a homeowners association’s) aesthetic requirements, then failure to paint them black could be considered a material breach. When there is a material breach, in most cases, the recovering party is permitted to either recover damages or compel specific performance of that condition.
Strategies to Combat Breach Allegations
Retaining an experienced construction law attorney from the beginning of a construction contract negotiation who will be able to work to ensure that all conditions of essential importance are adequately addressed in the contract is critical. Additionally, they will be able to set forth remedies in the contract, so that if specific performance is unavailable or impossible, alternative remedies will already be noted, and can quickly be implemented. Further, this implementation, if accounted for properly, can be affected without the immense cost and disruption of litigation.
If you or your company is considering entering into a construction contract with another party, contact the attorneys at Linkhorst & Hockin today. Our Jupiter construction law firm has the experience necessary to ensure that the requirements of your project will be addressed, and, if not, will ensure that you get the recovery you deserve. Contact us as soon as possible for a confidential consultation.