Tag Archives: business dispute

5 Reasons Why You Need Arbitration for a Construction Dispute (Guest Post)

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Today we welcome another guest author to the blog– Jonathan Newby.  Jonathan is in the brokerage business, and runs a website relating to brokerage fees.  Thanks Jonathan for your sharing your thoughts today.

5 signArbitration may be a better alternative to some construction disputes, assuming that you use a qualified and skilled arbitrator or arbitration panel.  Here are five benefits for using arbitration over litigation:

  1. Arbitration means that the decision maker is an experienced industry professional instead of a lay jury.
  2. Arbitration can provide better protection for your assets by minimizing your risk of large losses sometimes seen with jury verdicts.
  3. Arbitration can provide flexibility in scheduling, versus court where you are told when and where to show up without much room to negotiate.
  4. Arbitration can put an end to your case faster.  The time taken by an arbitrator is usually less than that to get a case to court to resolve a construction dispute.
  5. Arbitration costs can be much less when compared to the one charged during any other legal process like litigation.

These are five reasons why arbitration may be better for your construction dispute, so consider using an arbitration provision in your next construction contract.

Editor’s Note:  As I’ve previously noted, there are pros and cons to arbitration in lieu of trial.  The better venue is in part based on the type and size of contract, as well as numerous other subjective considerations.  Discuss whether arbitration is appropriate for you with your construction law attorney.

Thoughts, comments, or questions?  Drop Jonathan or me a note in the comments section, below. 

Photo (c) freefoto.com.

 

 

Pick Up the Phone! (Tues Tip)

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phoneToday’s Tip is a simple one: Pick up the phone to ensure good communications on the construction project.  Too many of us naturally default to email or text message when communicating on the fly.  Without the tone of voice, however, many times things get misconstrued or taken out of context. 

I’m sure you’ve had the experience of emailing someone, and later learning they are mad or offended at something you said.  You thought the comment was innocuous.  They took it the wrong way.  Apologies were necessary; feelings were hurt.

While telephoning the other party can take more time, it keeps things on an even keel.  Tones can be “read” and misunderstandings can be cleared up right away. 

The next time you need to have a substantive communication with the Owner or Contractor, try the telephone.  You know, that email-checking/text-enabling device that is always with you?  It can telephone folks too.  Try it.

This post was in no way inspired by any misunderstood emails involving the author.  (Am I serious, or kidding? Hard to tell, isn’t it?).

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Photo:  (c) Victor Manuel via Creative Commons license.

 

 

Construction Contract Drafting Webinar– a chance to hear me speak! (Oh boy!)

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Interested in learning about contract drafting strategies?  Make plans now to attend a live webinar entitled “Construction Contract Drafting Strategies: Crafting Enforceable Payment, Performance, Termination and Damages Provisions”.  

I will be one of 3 speakers for the webinar, which will be held Wednesday, September 7th from 1:00 PM-2:30 PM Eastern Time.

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Speaking troll
(This is *not* a realistic rendering, I promise!)

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This CLE webinar will include best practices for counsel to owners, contractors, and design professionals to mitigate risk and resolve contract disputes.

Questions addressesd will include:

  • What are the critical provisions in construction contracts that demand careful attention and negotiation by owners and contractors?
  • What are the most commonly disputed issues during construction contract negotiations and what are some effective strategies for resolving them?
  • What are the best practices for counsel to building owners, contractors, and design professionals to minimize liability for their clients when entering construction contracts?

To register, click here.  Early registration discounts end on August 19th, so don’t delay!

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Photo:  “Public  Speaking” by JASElabs via Creative Commons License.

 

 

 

 

 

Don’t say Please– Threaten to Tow! (aka Contracts matter)

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No parking please sign No parking tow sign

 

I was wandering through downtown Wilmington, North Carolina the other week after a trial was pushed off of the court docket.  Not two feet away from each other I saw these two signs.

Ask yourself—if you were looking for an (illegal) parking spot to run a quick errand—which spot would you park in?  The one with the sign that nicely asks you not to park there, or the one with the sign that says they will tow you if you do?  I think we can all agree that in this case, being nice does not help that parking spot’s owner.  You know the other guy means business, so you take him seriously. 

What does all this have to do with architecture or engineering? 

It is a stark reminder that words can be powerful.  Your contract language can make the difference between getting what you want (the empty parking spot) versus having to live with something you don’t (someone in your space).  It can mean the difference between the dispute venue you favor or the right to additional compensation.

When it comes to your livelihood, don’t chance it to be nice.  Gentlemen’s agreements and saying “please” just don’t cut it any more.

Which parking spot would you use? Do I even have to ask?  Saying please is all well and good, but stating your rights upfront will get you farther.  Sign up for email updates directly to your inbox, so you never miss a post here at Construction Law NC!

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Photos in this post: Creative Commons License

Planning Ahead for Additional Compensation

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money for additional services for construction administration

Does your designer contract have provisions in it for additional compensation in the event the construction project takes longer than the parties anticipate?  If you use the AIA 201 (2007) general conditions for the Contractor, it may.  The AIA provisions include:

 

 § 1.1.2 THE CONTRACT

The Contract Documents form the Contract for Construction. The Contract represents the entire and integrated agreement between the parties hereto and supersedes prior negotiations, representations or agreements, either written or oral. The Contract may be amended or modified only by a Modification. The Contract Documents shall not be construed to create a contractual relationship of any kind (1) between the Contractor and the Architect or the Architect’s consultants, (2) between the Owner and a Subcontractor or a Sub-subcontractor, (3) between the Owner and the Architect or the Architect’s consultants or (4) between any persons or entities other than the Owner and the Contractor. The Architect shall, however, be entitled to performance and enforcement of obligations under the Contract intended to facilitate performance of the Architect’s duties.

The language that I bolded is very important language.  It may provide a mechanism to recoup additional service fees for extended construction administration services.  Note, however, that I said “may.”

If your fees are based on a set number of construction days, what happens if the project gets extended?  Do you simply go without pay for extra months of CA services?  Do you re-negotiate with the Owner at that time?   You should consider this issue in advance to avoid disputes later on. 

Best practice?  A clause in the Owner-Designer contract that states that additional services compensation will kick in after a certain date,  at a set value per month.  

If you wait until the issue comes up during the final phase of construction, you have much less bargaining power.  You also run the risk of the Owner claiming errors and omissions against you when you present a bill for extra services.  Deal with the issue up front, in much the same way that unit prices for rock overages are provided for upfront in the contractor’s contract. 

Do you have experience with getting additional compensation after construction delays?  What worked best for your company?  Share below. 

And, sign up for email delivery of blog posts to your mailbox!

 Photo (c) Freefoto.com via Creative Commons license.