Disputes are almost inevitable in the construction industry. Any construction project, large or small, involves many parties, including builders, contractors and subcontractors.
With all of these players involved, along with a complex contract detailing each aspect of the project, you are bound to run into an issue at some point. Construction projects by necessity take a long time, and no one can predict the future. This uncertainty also increases the chance of a dispute.
A strong contract is essential
The best way to decrease your chance of disputes during your construction project is to start with a solid contract. It is best to negotiate your contract with the help of an attorney with specific experience in construction law.
Do not sign the contract until you are sure you completely understand all of the terms. Consider including alternative dispute resolution language.
This language can state that all parties to the contract agree that they will use an alternative dispute resolution method, such as arbitration or mediation, in the event of a dispute, instead of resorting to filing a lawsuit.
Mediation vs. arbitration
Mediation involves both parties presenting their side of the issue to a neutral third party. A disadvantage to mediation is that the third party has no power to make a decision but only to try to guide you to a resolution.
Arbitration is like mediation in that you both present your sides to a panel of third parties, called arbitrators. However, the arbitrators do have the authority to make a decision that will bind you.
Don’t be afraid to communicate
While having that language in your contract helps, it does not mean you cannot meet or communicate with the other party about the construction dispute beforehand. Direct and respectful communication cannot be overemphasized.
Sometimes, one conversation is all it takes to resolve a problem. You may not even need to engage in alternative dispute resolution.
Sometimes litigation is necessary
Even when everyone acts in good faith, there are times you simply cannot resolve your problem and must resort to traditional litigation.
An advantage to litigation is that it takes the decision out of your hands. It is now up to a judge. However, litigation can cause you to lose out on valuable time that could be spent on your construction project, especially if you reach the appeal stages.
