With So Many Projects Halted, Can Your Company Avoid Litigation?
We are experiencing an unprecedented time in the construction industry. All across the country, funds are running dry, owners are backing out, and projects are being halted. As if worrying about worker safety wasn’t enough, contractors must now contend with possible project cancelations. When an owner decides to back out of their contract, how will you react?
Project owners can’t simply change their minds when it comes to a multi-million dollar construction project. The red tape of a construction contract makes litigation a very real possibility in these situations. In this brief article, a Nashville construction litigation attorney discusses how widespread project cancelations are hitting the industry. We also discuss your options whether you want to avoid litigation or face it head-on.
Project Cancellations Caused by the Outbreak
A survey conducted by the Associated General Contractors of America (AGC) reveals just how precarious the current situation is for contractors. Out of 742 respondents, over two-thirds reported having a project canceled or delayed since the pandemic began. 24 percent of respondents experienced project cancellations that were scheduled to start in June or later — up from 16 percent just one month prior. As a result of project cancellations, 30 percent of construction firms have had to let employees go. Halted projects and cancellations are having an incredible impact on the industry, and it’s not for the better.
How to Avoid Litigation
With so many projects being delayed, it must feel like litigation is inevitable for many contractors. But that will depend entirely on the contract. In the event of a delay, most construction contracts will have what is known as a force majeure clause that entitles contractors to relief in the event of unforeseen circumstances like the current pandemic. Basically, if your company provided work or materials to a project, you are entitled to compensation even if your project gets delayed.
Project cancellation is another matter entirely. Your construction contract may or may not include provisions that allow the owner to terminate the contract. Termination usually requires an owner to give proper notice; however, that really depends on the contents of the contract. In some cases, a contract may be mum on the subject, meaning that it’s time to consult a Nashville construction litigation attorney.
Your contract may also contain provisions that require feuding parties to go through alternative dispute resolution (ADR) procedures before litigation can be pursued. ADR methods have proven to be effective at resolving disputes without resorting to litigation. But in the event that litigation is unavoidable our Nashville construction litigation attorneys can assist you. If your project has been delayed or canceled, schedule an appointment with the attorneys at Cotney Construction Law. Our team can review your contract and help determine if litigation can and should be avoided.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.