Dealing with a Breach of Construction Contract in New York, NY

Dealing with a breach of construction contract is an unfortunate situation, but it has to be addressed. The first step is to speak to an attorney and explore your options.

Construction contracts represent big projects needing lots of time, money, and coordination between many parties. A breach of this contract can lead to expensive consequences.

If you are a property owner or contractor facing a breach of contract, you likely feel stressed, frustrated, and uncertain about how to proceed. Cost overruns, delays, and construction defects can derail a project and leave you with financial burdens. An experienced construction contract attorney like us can minimize the effects of a breach.

What Counts as a Breach of Contract in Construction?

A breach means one party failed to perform its obligations according to the contract. The breaching party is usually called the defaulting party while the other party is called the non-defaulting party.

Most construction contracts have a clause, obligating the non-defaulting party to give notice to the defaulting party about the breach and the facts constituting the breach. It gives the defaulting party an opportunity to cure the breach after receiving notice. When in the contract, this notice is required before filing a breach of contract case.

Some common breaches include:

• Failure to meet project specifications, building codes, safety standards, or quality benchmarks. This may involve using substandard materials, improper construction techniques, or deviating from design plans.
• Failure to complete work within the timeline established in the contract. This could involve permit delays, weather delays, slow performance, or labor/materials shortages.
• Making unauthorized changes to the project design, specifications, or costs without written approval.
• Failure to make payments to subcontractors or suppliers as outlined in the contract terms.
• Failure to get necessary permits, bonds, or insurance coverage.

Determining Liability in a Breach of a Construction Contract

Because there are several parties involved in a construction project, when a breach occurs, liability must be established to determine which party is responsible for causing damages. Here are some rules in determining liability:

• The property owner or developer who signed the contract with the contractor has no liability for the breach unless for non-payment. They are usually the injured party entitled to compensation.
• The general contractor that signed the construction contract and hired subcontractors bears full responsibility for any breaches. This includes breaches caused by their own work, their subcontractors, or their suppliers. Exceptions are damages from flawed contract specifications provided by the owner.
• Subcontractors are liable for breaches in their scope of work outlined in their subcontracts with the general contractor. The general contractor can name subcontractors as co-defendants to recover related damages from them directly.
• Architects and engineers can face liability if defects in their design drawings or specifications caused project issues. They may be accused of professional negligence.
• Manufacturers and suppliers of defective materials may also be liable if their materials failed, causing a breach.
• Insurers may also be involved if they failed to provide adequate surety bonds or insurance coverage leading to a breach.

Identifying the parties’ liability is critical in recovering maximum damages available when pursuing breach claims. We can help unravel the complex matter of liability based on the contracts and evidence.

Documenting the Breach

If you face a potential breach of contract, you need to thoroughly document the situation including:

• All project correspondence such as emails, letters, and conversation notes.
• Photographs and videos showing construction defects, delays, or errors.
• Issued change orders authorizing any work modifications.
• Records from third-party inspections or work evaluations.
• Copies of disbursements, invoices, bills, and payment records.
• Meeting notes, daily logs, and engineering reports.

This documentation will support your claims and strengthen your negotiating leverage if formal legal action is needed.

Proving a Breach of Contract

To successfully prove a breach and recover damages, there are several legal elements that must be established:

Valid Contract

Evidence must show that a valid, enforceable contract existed between the plaintiff (non-defaulting party) and defendant (defaulting party).

Material Breach

The breach must be “material” and significant, not just a minor issue. It must undermine the contract’s purpose and project goals.

Causation

Proof must show that the defendant’s breach directly caused the plaintiff’s damages or losses. There must be a clear cause and effect.

Damages

Quantifiable monetary losses must have directly resulted from the breach. This is essential to get compensation. Common damages include cost overruns, reduced property value, repair costs, and increased financing fees.

Duty to Mitigate

The plaintiff must take reasonable steps to mitigate or minimize breach-related damages. The defendant may not be liable for losses that could have been avoided with prudent mitigation efforts.

Meeting these elements provides a justifiable basis for compensation. We have the expertise to gather evidence proving that all legal requirements for a breach were fulfilled. This ensures you receive full restitution for your losses.

Leveraging Expert Testimony

Proving complex technical elements of a construction contract breach often requires hiring experts to provide testimony and reports. Common situations needing experts are:

Defective Workmanship

Engineers, architects, or applicable trade specialists can examine and give written professional opinions regarding substandard construction techniques, code violations, or flaws in meeting quality standards per the contract.

Project Delays

Construction delay experts can analyze schedules to determine delay causes, rule out excusable delays, and find accountable parties.

Defective Design

Design professionals can review plans and specifications and determine if they contained errors, omissions, or negligence that necessitated contract changes.

Cost Overruns

Forensic accountants can analyze financial records and provide expert calculations on increased costs tied to the breach versus normal projections.

Causation

Various engineering and construction experts can analyze evidence and definitively link the breach to resulting damages, proving causation.

Industry Standards

Experts familiar with customs and standards for a specific building trade can opine on whether the work met norms for acceptable quality and workmanship.

Damage Assessment

Experts such as project managers, engineers, or quantity surveyors can provide cost estimates for repairing defective work or completing unfinished work per the original contract.

Securing seasoned specialists to provide persuasive testimony delivers immense value in proving breach of contract disputes in construction contracts. Their credible opinions substantiate technical aspects of your claim. Discuss with your attorney the need to have an expert to provide witness testimony.

Pursuing Settlement or Prosecuting the Breach

If breaches occur, there are a few potential paths forward:

Settlement

In some cases, the problems can be remedied by negotiating a settlement between the parties. Settlements can resolve the issue faster and cheaper than litigation.

Terminate the Contract

For irreparable or large-scale breaches, terminating the contract and hiring a new contractor may be the best option. This allows you to cut ties with a non-performing contractor before the problem gets worse. The original contractor can be pursued for damages.

Litigation

If the contractor refuses to correct the breach or disputes your claims, litigation may be necessary. We can provide legal counsel, file claims on your behalf, represent you in settlement talks, and take the matter to court if needed.

Damages

If you win a judgment in court, the contractor will be required to pay monetary damages. This compensates you for overpayments, repair costs, completion costs, architectural re-design fees, rental revenue lost, storage fees, investigative work, attorney fees, court costs, and other financial losses incurred.

Injunction

The court may issue an injunction requiring the contractor to stop certain actions, correct issues immediately, or perform specific duties to remedy the breach. Failure to comply becomes contempt of court.

Understanding all your options for addressing a breach is important. We are familiar with construction law and can advise the best approach based on your circumstances and maximum recovery potential. Don't let a contract breach go unaddressed - know your rights and explore solutions.

If you need to speak with an attorney, we at the law offices of Albert Goodwin, are here for you. We are located in Manhattan, in New York, NY. You can call us at 212-233-1233 or send us an email at [email protected].