Dealing with a dispute with a subcontractor can be a complex and challenging situation. While it may feel overwhelming initially, taking immediate action to protect your interests and resolve the issue is essential. Handling these issues promptly and effectively is important to minimize any negative impact on your business.

General contractors often need to subcontract some of the project’s work. Whether it is due to efficiency or because they cannot perform the work themselves, a contractor has a separate agreement with another construction company to perform discrete tasks as part of a subcontract. Even building an average home requires many subcontractors. Often, there are far more subcontractors working on a larger construction project.

The general contractor has much to oversee because several different parties are performing work. Thus, there are also many other avenues for potential disputes with subcontractors. Unless the general contractor works exclusively with subcontractors they know, there may be a disagreement at some point in the construction process. The general contractor may even dispute with more than one subcontractor simultaneously.

Subcontractor disputes have a definite possibility of becoming litigated court cases sooner rather than later. However, you may avoid litigation entirely by proactively engaging with the subcontractor. As a general contractor, you should hire an experienced construction law attorney when facing a disagreement that may go to court as part of a lawsuit. A construction law attorney can help you plot your legal path forward and represent you in your dealings with the other party. They can also provide uncompromising legal representation if your case goes to court.

Need Legal Help? Let’s talk

Examples of Disputes with Subcontractors

Unfortunately, subcontractor disputes are far too common. You may have an issue with something that they have done on the job, or they may claim that you breached the contract.

There are several areas of disagreement with a subcontractor that can include:

• Payment issues: There are numerous potential disputes related to payments. The subcontractor may claim you owe them more money or that you have delayed payment. You may be trying to withhold some payment from the subcontractor because of the poor work that they have done. 
• Performance Issues: The subcontractor may have completed work that was not in accordance with the specifications you both laid out in the agreement. The work may be incomplete or substandard, and the subcontractor may be liable for a material breach of contract when their performance was slipshod.
• Changes to the contract: The subcontractor may claim that the general contractor ordered changes to the agreement that cost them more money. Sometimes, the subcontractor has the legal right to get paid more when a material change to the contract increases costs. The alleged changes may result from ambiguous language in the contract.
• Delays: The subcontractor may have fallen behind in their work performance, and the general contractor may seek to terminate them or impose other penalties for their lateness.

Review Your Contract

The contract is the key document in any court case involving a subcontractor. You have a contractual agreement with them, and the subcontractor should perform services according to the specifications and requirements of the contract in exchange for payment.

If you have a well-drafted contract, it may be clear enough to prevent disputes and possible litigation. Subcontractor contracts may include the following clauses:

• Payment: The contract includes terms that dictate when, how, and how much the subcontractor will receive payment for their work.
• Scope of work: The agreement sets out the scope of work the subcontractor must do and the performance standards they must meet.
• Disputes: Every contract should have a mechanism for the two parties to follow when there is a disagreement (some contracts may make mediation mandatory before one party can file a lawsuit against the other).
• Termination: There are terms that the contract needs to apply when the general contractor wants to terminate the agreement with the subcontractor.
• Breach: The contract may specify damages when one party breaches the contract.

If you are in a subcontractor dispute, the first thing that a judge will look at in a court case is the exact language of the contract. That will inform how the judge decides the dispute. The hope is that the contract’s language is unambiguous, and the judge will not need to interpret what the contract says. The court only considers evidence outside the contract’s four corners in minimal circumstances.

A construction lawyer experienced in contract law can help you draft a subcontractor agreement. They will ensure that all the necessary elements are included, such as precise project specifications, payment terms, project milestones, and dispute resolution procedures. You can avoid confusion or misunderstandings by clearly outlining these details in the contract.

Take Early Action to Engage with the Subcontractor

It is rarely in your best interest to proceed immediately to litigation when you are in a dispute. You can resolve the disagreement without having to take it to court. Keeping open and informal communication during the performance of the contract helps keep disputes from arising in the first place.

If you are in a dispute with the subcontractor, you should communicate with them both to understand where they are coming from and for them to learn your position. You can communicate through letters or in the course of formal meetings, and this can help keep misunderstandings from reaching full-blown disputes. You should keep records of all your interactions with the subcontractor during the dispute because some may be admissible as evidence if your case goes to court.

By this point, you should have already retained a construction lawyer to represent you (or you may already have one on retainer). Your construction law attorney can help you communicate with the other party by sending letters and attending meetings.

However, you need to bear in mind that you must raise issues of noncompliance with the contract to the subcontractor as it is happening. If you continue to allow substandard performance that does not follow the specifications during the course of the contract, the court may even deem that you have waived your legal rights.

Alternative Dispute Resolution in Your Subcontractor Dispute

There are ways to get external help in resolving your subcontractor dispute instead of filing a lawsuit and going to trial. Mediation is the most common form of Alternative Dispute Resolution (ADR), and parties often use mediation because statistics show a very high success rate. Some estimates place the success rate of mediation as high as 80 percent. Mediation allows for an open exchange of viewpoints with the help of a third party whose job is to find common ground whenever possible before working to bridge the more significant gaps in a position. The terms of your contract may even require you to try mediation before filing a lawsuit in court.

Arbitration is another form of ADR. Here, instead of speaking directly with the other party, you are engaging in litigation. However, arbitration is quicker and less expensive than traditional litigation in the courtroom. You may end up in arbitration either because the terms of your contract require it or both parties have agreed to it.

What to Do if You Cannot Resolve Your Case

You may have no choice but to take your case to court or defend a lawsuit someone has already filed against you. Although jury trials are rare, both parties to a subcontractor dispute have the right to a day in court if necessary. Oftentimes, subcontractor disputes will result in counterclaims, where the defending party will file a lawsuit of their own against the original plaintiff.

The subcontractor dispute litigation process can be lengthy and complex, and a court case may take years from beginning to end. You may have to deal with depositions and voluminous document requests along the way. You may also need the help of an expert witness, especially if the case involves substandard performance on the subcontractor’s part.

It is best to have a construction lawyer representing you who has experience in litigation. A tough litigator can help you get the best possible result in your case, even if you do not end up at trial. Your construction lawyer can set the stage for a settlement on terms more favorable to you through a strong showing in the discovery process on your behalf. If you have to go to court, a construction attorney will present your arguments to a judge or jury (depending on whether your case is a bench or jury trial).

Common Legal Grounds in a Subcontractor Dispute

Breach of contract is the most common ground in a subcontractor suit. A party who can prove that the other party did not comply with the terms of the contract may have the legal right to monetary damages. Breach of contract claims can arise when the subcontractor delivers their work late or fails to perform according to the contract’s specifications. It can also be a breach of contract if the general contractor does not pay the subcontractor in time or the full amount they owe them.

If the dispute concerns the subcontractor’s quality of work, the general contractor can also sue for negligence. The subcontractor may not have fulfilled their duty of care in performing the work under the contract.

The subcontractor can also file claims for change orders to the contract, which can be actual or constructive. For example, suppose they encounter a differing site condition from what they may have seen in the project documents and during their site visit. In that case, they may sue for additional compensation to reflect their expenses.

When to Consult a Construction Lawyer

You should get legal help from a construction attorney early in the dispute process to obtain the best possible result. Getting a construction lawyer engaged in your disagreement early reduces the chances of your dispute becoming a lawsuit. When you hire a construction lawyer, they will guide you through the process while they provide you with pragmatic legal advice. It is best to resolve the case with the other party before it reaches the point of a lawsuit. Your construction lawyer can communicate on your behalf, helping you keep emotions out of the picture. They can also recommend that you attempt mediation in your dispute.

Of course, the early involvement of a construction attorney will help protect your legal rights if you need to file a lawsuit against the other party. Certainly, you should contact a construction attorney immediately if you have a dispute that can become a lawsuit at any time.

You cannot avoid every dispute, but you can get effective legal representation from a construction law attorney. Hiring a construction law attorney at the outset of a project means they can already be familiar with your situation by the time you call them to handle this particular disagreement. A seattle real estate lawyer with experience in construction law can empower you to handle the problem effectively and protect your interests. Do not hesitate to seek professional legal guidance to deal with subcontractor disputes and reach a favorable outcome.

 

Need Legal Help? Let’s talk