Generally, it's safe to assume when someone does work on a construction project, that person will expect to be paid. How soon that obligation to pay arises, however, is likely determined by the contract between the parties. In some cases, when it comes to a prime contractor paying its subcontractors, that obligation might never arise.
It's generally safe to assume people intend to finish what they've started. When parties don't see a project to completion, however, contract law will usually provide remedies. But what if that nonperformance is the result of matters beyond the parties' control? In that case, construction contracts only operate to bail out a nonperforming party if they contain a "force majeure" or similar clause.
Last week we wrote about some of the unique qualities of Oregon's Prompt Payment Statute that provides recourse for construction subcontractors and contractors when an owner or contractor fails to pay on time. Though it can be particularly harsh, the statute's penalties will not always apply all of the time.
As we've recently highlighted, the Construction Contractors Board and Oregon OSHA seem to be ramping up enforcement of their respective authorities under Oregon law. Where rules contain mostly black-and-white requirements for owners and contractors, as well as harsh enforcement options, the CCB has found the perfect place to flex its authoritative muscles. One such area is the CCB's enforcement of Oregon's Prompt Pay Act.
We've previously discussed some of the costs that come with changing or cancelling construction contracts. Sometimes circumstances change that makes these costs unavoidable. But, where the contract need not be rewritten or cancelled, most of the costs resulting from construction contract disputes can be avoided. Though it sounds like a no-brainer, the best way to avoid these costs is to have carefully drafted contracts, written to anticipate circumstances that may change each party's position.
Whether you're building a home from the ground up or buying one that's already there, ultimately closing the deal often hinges on an inspector's report. These home-inspection reports are meant to confirm the residential structure is in good physical condition. But, as you can probably imagine, these reports aren't always accurate. In the case of an imprecise inspector's report, who should bear the cost of any resulting injury or repair?
Earlier this week we shed some light on the consequences of cancelling construction contracts. As we noted, things can change in an instant in the construction business, causing us to reconsider the contracts we signed. Fortunately, those changes don't always necessarily lead to contract cancellation.
Though we don't normally plan to, any number of factors can lead us to cancel construction contracts. This is especially true in the construction context, where even a rainy day can cause us to halt or abandon construction entirely. If construction contracts are not carefully considered before execution, these cancellations can be extremely costly.