Litigating Construction Disputes

It depends - usually as a last resort, but when it comes to this, the lawyers are usually the only ones to win.

Mediation is usually the preferred method.

... here is a good article:

http://library.findlaw.com/1999/Jun/1/129206.html

Have you already tried excavation? Cultivation would be next. Then, arbitration if the other two haven't resolved the issue. Litigation usually requires lawyers and is always the least effective/most distasteful course of action.

No, that is mostly a loose loose situation.

Reading the contract carefully at the start is a much better option.

Maybe an ADR clause in the contracts could be a good idea to avoid litigations.

By the time you are to the point of "lawyering up", it is usually time to take a look at your basic way of doing business. The only thing to gain at this point is experience in dealing with business "associates". The name of the game is "make money", bottom line, that is you and everyone else involved in your project.

After your company becomes large enough you can apply generous amounts of "principles" and "integrity" and the larger you are the more pure you can become.

There comes a point in contract disputes that someone digs in his heels and says NO!. Regardless of what that no is in reference to it is usually unequivocal and has the potential to become personal.

You need to look at your contract and determine that the disputed point in the contract really says what you intended. If you in fact have a valid complaint then you have to evaluate if it is reasonable to expect the contractor to correct the problem. We should all know that you aren't going to get a million dollar guarantee for a $2000.00 job unless you state that in the contract and give the contractor the opportunity to insure himself to your expectations.

You may want to look at how you got into the situation that you are in, the astronaut heading for the moon probably was not too comfortable with the knowledge that for the most part the craft he was riding was built by the lowest bidder.

Did you qualify your contractor or did he show up with his entire inventory in the back of his pick up.

If the problem is just plain shoddy workmanship and the contractor refuses to correct the problem you may want to take him to court to teach him a lesson.

Too many scenarios.

Generally a good answer, but I disagree with, "After your company becomes large enough you can apply generous amounts of "principles" and "integrity" and the larger you are the more pure you can become."

If you do not start with integrity you are lost in the long run and your company will never get to a point where it can apply integrity and principles retroactively. Time and morals are linear and run in only one direction.

There is no time machine here.

Herein lies the cause of most contract disputes. What you read was not what I meant.

The intent of the statement was based on the fact that I did not know what type of an organization the OP is associated with. It is one thing to be a highly principled "fat cat", it is quite another to have your business on the line either as the recipient or provider of a service.

I would love to agree with your statement, "Time and morals are linear and run in only one direction." The problem that I have with that is morals are an individual virtue, or for that matter a lack of morals are also an individual trait. Or maybe better stated "Good guys don't always finish first". I agree that time is linear and runs in one direction.

My point for the question is that you have to evaluate all the factors and get impersonal enough with the situation that you can proceed fairly. You need to proceed with a bad situation until it is resolved fairly, Lawyers do not work on this premise.

Otha:

That is correct - interpretation of language is the principal cause of most contract disputes. But note that OP has not informed us of the nature of the dispute.

On the other hand, I read and responded to what you wrote. Not what you intended. Unless you write clearly and express your intention what you write delimits the scope of intention and interpretation. btw - this is a common failing of engineers. They insist on mathematical precision but do not understand that language is or can be just as precise. If I have to interpret what you mean I do not understand what you have written.

And I wholly disagree with the idea that an organization has to be a certain size before it adopts rules of conduct, principles of corporate behavior and SOPs. I have started up a number of companies and partnerships. Some initially as small as 5 staff and others as large as 100. The first thing I insist upon is the drafting and adoption of those rules of conduct and they are generally presented at the the first meeting of the BoD.

If you do those things first you can generally avoid a host of problems. But you can never anticipate the bad guy or the good guy who suddenly decides to try to take advantage of you. If litigation results you will always be better off if you can show a course of conduct that exhibits fair dealing. I might also note that that is a principle of Anglo American common law. It does not always apply in code countries.

In any event this is getting way off topic so I will end it here.

The goal in any dispute is to compromise and find the middle ground that is acceptable to all parties involved. The most effective way is to review, in-detail, all contractual material associated to the issue (bids, quotes, purchase orders, contracts, etc.) and place yourself in the shoes of the opposing party.

As it has been said previously, most disputes revolve around money. Maybe the contractor under bid and is loosing money on your job so they will do whatever is necessary to save every penny. If this is the case, then you have an advantage because litigation cost money. Unless, of course, the firm you have a dispute with is large. Most large companies retain a law firm and they pay for their services whether they use them or not.

On the other hand, if your company has a firm already retained, litigation may be the most efficient course of action. It hands the issue off to them and frees you and other staff up to focus on another job or project.

A common approach to finding middle ground it to agree to pay "cost" for the additional services required. This way you get what you want and although the contractor will not make money, they wont loose any either.

Remember, the basic foundation of conflict resolution is compromise.... lawyers, once introduced, bring additional conflict. After all, they are a business as well. Their goal is to make money, they do this by increasing the level of conflict.

But, sometimes issues become so complex, or the issue is very critical, that the best option is to introduce legal counsel. Since we do not know the specifics of your situation, or it's negative impacts should you loose the dispute... it is hard to say what your best course of action is.

In closing, it is ALWAYS best to try and work out an equitable solution without introducing the lawyers into the mix.

Good luck my friend.

JavaHead <- who has been deposed more times then he cares to remember *sigh*

Again - Not Enough Information - which leads to speculation. Books - nay - libraries have been written on this topic.

As has been observed by others, the key issue is money - but not always. Could be interpretation of specs; or task responsibility; or scope; or timing. Depending on the where you are in the project, size of the project and relative size of the potential claim your choices range from negotiation to arbitration, to mediation to litigation. Litigation is the last and least desirable alternative.

Most construction contracts have an arbitration provision and identify an arbitration body as well as a method for selecting the arbitrators. Some are very specialized and concentrate on particular industries or trades.

Based on the question, it appears that your contract does not provide for arbitration. You can always suggest to the other party that the matter be submitted to an arbitrator. If the dispute is simple, a single arbitrator can be appointed.

Arbitrators are not judges and generally not lawyers but experts in a particular field. But be aware, arbitration is not a 'get out of jail - or avoid the dispute- free card'.

The best way to handle this problem is to avoid it. Careful contract drafting, including specifications, schedules and assignment of task responsibilities before work is initiated is the best curative.

Use arbitration, not litigation. Tony

Dear Upulchandima,

The question here is not Litigation or something else. What's the dammage? Last night you went home, the first evening for your new house, and when you open your eyes on the entrance of your house, you discovered that your house is levelled to the third step of your balcony. Ayay! Everything what you put in during the last weekend, all your stuff except your future wife, she was at here home, safe and healthy in the arms of someone else. The police and the fire department were already around for two hours and investigated what was the cause of this collapse. No explosion of some fanatic bomb poser, no vangance from girlfriend, she was under another private investigation during this unopportunity, and you were at work when the collapse happened.

There are no litigation, no arbitration, and just meditation about the event. You call the building contractor and the seller of the house, and start to distribute your losses, expressed with the $ signs.

Aha! Did not happened that way? It's not your house? So, what's the problem. Please, dear Upuchandima, tell us what's the problem and what you want to get?

I am really confused but my story is real, it was happened close to 30 years ago to one of my best friend. Oh, what was the final solution to his collapse? He went to live in my basement for 9 months helping paying my mortgage, and after that he got another house and $55,000 of compensation. He wasn't very happy with but his lawyer told him: This is the solution to your problem and better to accept and take everything before another lawyer will take away from you.

Now, when you have a problem and you want a solution, why you don't tell us the whole story? Take your time, the weekend comes, and we can wait for your answer which will be your question, Gil.

Hi everyone — I thought I’d share a perspective from someone who works in construction dispute mediation (not a builder, but a mediator/consultant), because I’ve seen issues like this several times — and sometimes the least obvious part of a dispute is how the contract is written and how “costs incurred” are documented.

What you absolutely should check before assuming a deposit or upfront payment is “non-refundable”:

• Exact Contract Wording: Many disputes come down to semantics. If the contract says “non-refundable deposit,” does it also define what portion is refundable if no work proceeds? Is there a clause for “reasonable costs incurred”? If it doesn’t clearly define allowable deductions, that ambiguity can be challenged.
• Evidence of Actual Expense: For the builder to justify withholding the entire deposit (or a large chunk) they must show concrete costs — invoices from engineers/council, actual fees paid. If the charges are vague (e.g. “admin costs” without supporting bills), that weakens their position.
• Proportionality & Fairness: Even with a non-refundable clause, courts or dispute resolution bodies may view excessive claims as unfair or unconscionable (depending on jurisdiction). If $22k deposit then a $14.5k “cost breakdown” for drawings/DA seems inflated, that might be a ground for dispute.
• Negotiation & Mediation as First Step: Often builders don’t expect push-back if you challenge unclear charges. A polite but firm request for documentation or partial refund can lead to compromise — especially if you frame it around fairness rather than confrontation.

From my experience, many “lost deposits” could have been avoided or mitigated with clearer contracts and better documentation. So if you’re heading into any building agreement — or dispute — treat the paperwork as seriously as the price quote.

If anyone is dealing with a dispute right now and wants to discuss how to approach documentation or review the contract’s fairness — I’m open to talking. Sometimes having a fresh, mediation-informed view can help spot problems before they escalate.

Stay safe, and I hope this helps someone here.