Construction Law And Construction Disputes


Disputes between construction contractors and customers are common and mostly arise due to delays by construction companies in completing the work on time, unsatisfactory workmanship, and delayed or disputed payments. Construction law deals with a wide variety of different issues associated with the building industry which includes the licensing and regulation of contractors, inspection of construction assignments as well as settling of any disputes, should they arise. Any significant construction work done on a residence will be governed by construction law. Contracts drafted to build, remodel or add to a home frequently lead to disputes, mainly because the agreement for the project was not clearly set out. It is therefore vitally important to consult with a construction attorney on drafting a clear agreement before signing any contracts.

Resolving Construction Disputes

Most construction contracts will set out the manner in which to resolve disputes and a typical contract will recommend the use of other means rather than litigation – which can consume time and money sometimes completely out of proportion to the actual money at stake. Mediation and arbitration is mostly used to settle disputes that arise from construction projects, however, some construction disputes can only be resolved through the use of litigation. A qualified attorney experienced in handling construction-related disputes can help clients pursue their claims in a cost-effective and efficient manner. It is recommended that any homeowner considering major construction to their home should consult an attorney before entering into an agreement in order to fully understand their obligations and rights under construction law.

What is Construction Law?

Construction law deals with all matters that relate to building construction such as engineering and other related fields. It is in effect an amalgamation of contract, commercial, planning, employment law, and tort. It covers a range of legal issues arising from construction contracts including negligence, bonding and bonds, tendering, sureties and guarantees, liens and security interests, construction claims and other related consultancy contracts. Construction law will affect many different participants related to the construction industry including surveyors, builders, architects, engineers, planners, construction workers and financial institutions. It builds upon methodologies and legal principles and incorporates the following:

–              Regulatory framework (including planning, security of payment and building and environmental regulations;

–              Sub-contract issues;

–              Dispute avoidance and resolution;

–              Contract selection and methodologies (including alternative and traditional forms of contracting);

–              Performance and insurance security;

–              Causes of liability and action arising in contract, negligence or other grounds.

Ways Of Resolving Construction Disputes

Litigation – a claim that arises under a mechanic’s lien will require court action to enforce it. A lien is attached to property when goods are delivered or work performed, and remains attached until payment is made. If the owner of the property does not pay for the materials or services the service or goods provider may initiate court proceedings to enforce a lien. If not settled or resolved before final judgment it may result in the sale of the property to pay for outstanding services and materials.

Arbitration – most construction contracts will require that disputes be handled and resolved by arbitration and many courts will recommend arbitration before trial is considered. This is a much less formal type of trial where the dispute is heard by neutral arbitrators selected from a panel. Arbitrators may be people with construction industry expertise, or attorneys, who act like a judge would in hearing the case and coming to a decision based on the evidence. Although this form of resolving disputes is informal it is still important to consult with legal counsel to present your case in the best possible manner.

Mediation – although seldom required by contract, it is often ordered before a case will be allowed to be heard in court. A mediator is a neutral party, like an arbitrator, who attempts to get parties to agree to a mutually beneficial settlement, however, unlike an arbitrator, does not make decisions as to who is right or wrong.  A mediator simply does what he can to get parties to agree on common ground and their role is limited to hearing each party out and presenting proposals and settlement options. Mediators are selected mainly for their knowledge in a particular area of construction law which makes them capable of advising a party as to whether it would be in their best interest to accept a settlement, or whether a claim may or may not be successful in court. Disputing parties are not forced to come to an agreement and those that refuse to compromise or settle are not penalized.

Because construction disputes are often complex and expensive to resolve, no matter which method is employed, it is advisable to consult with a construction attorney who is qualified to represent your best interests.