Building owners in Tennessee often enter into written agreements with contractors to have construction work done to their properties in exchange for payment. A construction contract will typically include the following information:
- The scope of the project to be completed.
- The process for modifying the project plan.
- The total cost of the project and the terms of payment.
- The project schedule and any work completion deadlines.
- The quality of the work.
- The process for resolving disputes.
When one party fails to uphold their contractual obligations, they have breached the contract. The breach may be material (significant), or non-material (non-significant). Generally, parties will only take legal action to remedy a material breach.
What are some examples of material breaches?
When it comes to construction contracts, material breaches generally relate to the scope of the project, quality of work, and delays. Here are some possible material breaches of construction contracts:
- Abandonment of the project.
- Failure to pay for completed work.
- Failure to comply with work project specifications (e.g., using materials that are inferior to the materials required in the contract, resulting in structural issues).
What happens if a breach is considered material?
If a material breach of contract occurs, the aggrieved party has several options for recovery. The aggrieved party may:
- File a claim for damages: The aggrieved party may recover compensatory damages for the actual damages suffered due to the breach, as well as possible punitive and liquidated damages. Punitive penalize a breaching party in cases where the breach was intended to cause harm to the aggrieved party. Liquidated damages are often mentioned in the contract for specific types of breaches.
- Rescind the contract and attempt to return everyone back to the position they were in before the contract was signed.
- Reform the agreement: Alter the terms of each party’s obligations specified in the original contract.
- Specific performance: Requiring both parties to perform under the contract.
A material breach of a construction contract can cause significant harm to contractors, property owners, and business owners. It is important to address these breaches head-on as soon as possible to mitigate your damages.
