Breach of Construction Contracts

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According to the Bureau of Labor Statistics, the construction sector is primarily engaged in the construction of buildings or engineering of highways, utility systems, etc. Construction work covers a broad range of developments including new work, additions to residential homes or commercial buildings, alterations, redesigns and reconstructions, demolition sites, or maintenance or repairs.

Most construction companies have a general place of business; however, the construction company often performs multiple projects at different sites. The production responsibilities of the construction sector are typically covered in contracts with the owners of construction projects (prime contracts) or contracts with other construction establishments (subcontracts).

In the construction industry, contractors rely heavily on construction contracts to protect themselves legally from any potential losses. The construction contract serves as an agreement between the two parties involved in a construction project, and both parties to the contract are obligated to perform their end of the contract. If one of the parties fails to perform their end of the contract, or otherwise "breaches" the contract, then the other party can sue them for damages. The damages are the sum of money that compensates the financial losses suffered as a result of the contract breach.

Understanding Contracts

Contracts are legally enforceable agreements that are made between two parties. Under a contract, each of the parties makes a promise to fulfill a specific obligation or to pay a certain amount of money. If one of the parties fails to do as they promised, and the other party has fulfilled their end of the agreement, then the injured party has a right to pursue financial damages.

In general, both oral and written contracts are legally enforceable; however, it is always recommended to put a contract into writing in case a dispute arises between the two parties down the line. If a contract is oral, then the terms of the contract can be open to misinterpretation, or one of the parties can forget a term of the original arrangement altogether.

A contract breach occurs when one of the parties fails to perform their duties under the terms of the contract. A contract can be breached when one of the following occurs: 1) one of the parties doesn't perform their duties as promised, 2) one party does something that prohibits the other party from performing their duties under the contract (e.g. one party fails to complete laying a foundation or installing the electrical), and 3) one of the parties refuses to perform their contract duties.