search
cart
facebook twitter linkedin youtube instagram Spotify Podcasts Apple Podcasts Spotify Podcasts Apple Podcasts
  • Sign In
  • Create Account
  • Sign Out
  • My Account
  • NEWS
  • TOPICS
    • Cool Roofing
    • Event News
    • Latinos in Roofing
    • Low Slope
    • Legal
    • Metal
    • Project Profiles
    • Roofing Supply Pro
    • Roofing Safety
    • Steep Slope
    • Sustainable Roofing
    • Technology
  • EXCLUSIVES
    • Best of Success
    • Contractor Profile
    • IRE Show
    • Roofing Contractor of the Year
    • Top 100
    • Young Guns
    • State of the Industry
    • Century Club
  • MULTIMEDIA
    • Videos
    • Podcasts
    • Interactive Spotlights
    • Roofing Quizzes
    • IRE Videos
    • Webinars
    • Photo Galleries
  • PRODUCTS
    • New Products
    • Featured Products
  • COLUMNS
    • Editor's Note
    • Exit Planning
    • Legally Speaking
    • Safety Advice
    • Technical Details
    • Guest Column
  • EVENTS
    • International Roofing Expo
    • Webinars
    • Best of Success Conference
    • Industry Events
  • DIRECTORY
    • Associations
    • Distributors
    • Manufacturer/Supplier
    • Business Services
    • Get Listed
  • MORE
    • Roofing Contractor eNews
    • Techos y Más Advisory Board
    • RC Store
    • Roofing Supply Pro
    • Custom Content & Marketing Services
    • Market Research
    • Sponsor Insights
    • Company Spotlights
    • Classifieds
      • Auctions
      • Business For Sale
      • Business Opportunities
      • Equipment For Sale
      • Positions Available
      • Products
      • Safety
      • Software
      • Services
      • Training
    • Contact Us
  • EMAGAZINE
    • eMagazine
    • Advertise
      • Media Kit
      • Editorial Calendar
      • Contact
    • Archive Issues
  • SIGN UP!
Columns

Tips on How to Avoid Major Litigation Land Mines

By John Alfs
August 1, 2004
Anticipating potential pitfalls will help contractors reduce or eliminate common conflicts.

Understand the Relationship Between the Parties Involved

A successful construction project requires coordination between all of the parties involved. If the parties do not have a clear understanding of their roles and duties, disputes will occur. It is the responsibility of the general contractor to ensure that all involved-from the client to the general contractor to the subcontractors and their employees-not only have a firm understanding of their requirements, but also how they interrelate with one another. Problems can arise simply because one of the parties exceeds or fails to meet his obligations which can, in turn, cause a domino effect on the others.

Clarity with job duties begins with a careful review of all of the pertinent contracts on the job. The general contractor must review the prime contract with the client and all of its subcontracts. Additionally, the GC must interact with the subcontractors and their employees in a consistent manner in order to avoid later confusion. Without careful attention to this issue, the project can face delays, cost overruns, workmanship issues and other problems.

Avoid Undocumented Alterations to the Project

One of the most common oversights that lead to disputes and litigation is lack of documentation for changes to the scope of the project or for additional work performed. While the basic contracts and agreements between the contractors on a project set forth the scope of the project and many of the guidelines towards its completion, changes to the original specifications undoubtedly occur. Changes arise for several reasons: feasibility issues on site, financial constraints, and client intent are just a few. All of these changes-and their approval-should be memorialized in some form of writing.

It is important to document changes for two reasons. First, because construction projects are usually governed by contracts in writing, almost all changes to that contract must also be in writing to be enforceable in court. Second, changes in the project will invariably change the cost of the project. If the project becomes more limited or expansive, the cost will rise or fall. Variance in costs affects margins both upstream and downstream in the contractor chain and, without appropriate documentation, will lead to disputes regarding who is responsible for the change in cost.

Provide Notice of All Delays and Their Cause

Similar to undocumented changes, disputes arising out of delays on a project are some of the most frequent areas of litigation. Because of the specialized nature of work that goes into a large project, construction progress can frequently rely on dozens of different subcontracting companies providing a wide variety of expertise. Often, one company cannot begin its work until another has completed its duties. Additionally, most contracts will contain a deadline of some form by which work must be completed. For these reason, delays by one company can cause issues and problems.

The major problem that arises from delays is cost. Costs in materials and labor change. Furthermore, subcontractors plan and accept or reject their projects and manpower allocations in reliance upon deadlines that are set by either the general contractor, client or another subcontracting company. Failure to start on time can cause disruption, especially to smaller companies, which can lead to higher costs and potentially high losses in revenue. Therefore, when delays do occur, it is imperative that they be carefully documented. Correspondence and memoranda upstream seeking additional time as well as downstream providing reasons for the delay will help to prevent others from suffering damages as a result of the delay, while protecting the delayed company from liability.

Prepare for Employee Disputes

Although most employees are considered "at-will" (and can, therefore, be terminated without cause), issues with employees frequently occur. Allegations of breach of employment agreements and/or wrongful discharge will be brought and contractors should be prepared to defend themselves. There are some preventative steps that the contractor can take to avoid liability.

First, it is important that the status of all workers as either independent contractors or employees is clearly understood and complied with. This distinction is important for a variety of reasons including liability for damages, payment of taxes and control. The parties' roles should be defined in the contract documents and in the manner in which control is exerted upon them. Courts have held that even though an employee is labeled an "independent contractor," if enough control is exerted by the employer, he will be treated as "employees" under the law. Second, if the worker is an "employee," it should be clear who his "employer" is. Employers can be liable for the acts or omissions committed by their employees.

Pay Attention to Bond Filing Requirements

For a variety of reasons, a situation will arise where either a contractor cannot pay a subcontractor or a subcontractor cannot complete its duties. For this reason, payment and performance bonds-insurance policies protecting construction companies from failures to perform and pay-are becoming increasingly common. In order for a proper claim to be made on these policies, however, very strict contractual and statutory requirements and deadlines must be met. These include potential claimants' timely provisions of notices of furnishing and last furnishing, and the bond holder ensuring that it is secured, its premiums are paid, and that all notices submitted by claimants are timely addressed.

Warranties and Workmanship

In addition to the many procedural and administrative issues contractors face, one obvious source of dispute is with regard to the quality of workmanship. Warrantees are frequently used to ensure that the work performed meets the standards that the client or the general contractor want met. If warranties are going to be included in the contract documents, however, they must be explicit and specify the work that is going to be warrantied.

As with many of the issues discussed, to avoid dispute, the warranty should be carefully drafted. The purpose of a well-written warranty is to limit the exposure of the general contractor for work that is performed by the subcontractors. Similarly, subcontractors must draft their warrantees in such a way that they are not found liable for defective work that was performed by other subcontractors. These goals can be accomplished by clearly stating the scope of the work warrantied and the parties whose work is being warrantied.

Being Smart in the Relationship

Finally, one of the most important guides to avoid litigation is one of the simplest: Be smart in the business relationship. Most of the time, disputes will arise on a construction project between parties that have worked together in the past, have more work together on the project, and will likely work together in the future. Sometimes, the best resolution to a dispute will be to bite the bullet, take the loss, and expect that a good long-term business association will be made or preserved. Also, taking the loss will often prove less costly than a protracted dispute or litigation would be.

There are occasions where arguments between parties cannot be avoided. There are preventative measures that can be taken, however, which will reduce the number of disputes or, in the alternative, lead to victory if litigation begins. The key is well-written, signed documentation (frequently projects begin before the documents are signed; a practice that can lead to disputes and complicated, expensive resolutions), and continuous, consistent communication.

Share This Story

Looking for a reprint of this article?
From high-res PDFs to custom plaques, order your copy today!

John B. Alfs is an attorney with Cox, Hodgeman & Giarmarco P.C., Troy, Mich.

Recommended Content

JOIN TODAY
to unlock your recommendations.

Already have an account? Sign In

  • Roofing Contractor Group Publisher Jill Bloom

    Physics, the Power of Authenticity and You

    In February's Publisher's Note, Jill Bloom describes a...
    Columns
    By: Jill Bloom
  • The Family Food Fare supermarket in Midland, Mich.

    ‘Rooftop Ninja’ Discovered Living on Roof, Inside Grocery Sign

    A bizarre tale out of Midland, Mich.: a woman dubbed the...
    Roofing News
    By: Bryan Gottlieb
  • A before and after heat measurement comparison

    How Hot is Too Hot in the Attic?

    If the ventilation is working, how hot should the attic...
    Columns
    By: Paul Scelsi
You must login or register in order to post a comment.

Report Abusive Comment

Manage My Account
  • eMagazine Subscription
  • Sign Up for the eNewsletter
  • Online Registration
  • Manage My Preferences
  • Subscription Customer Service

More Videos

Sponsored Content

Sponsored Content is a special paid section where industry companies provide high quality, objective, non-commercial content around topics of interest to the Roofing Contractor audience. All Sponsored Content is supplied by the advertising company and any opinions expressed in this article are those of the author and not necessarily reflect the views of Roofing Contractor or its parent company, BNP Media. Interested in participating in our Sponsored Content section? Contact your local rep!

close
  • TAMKO Titan XL Shingles
    Sponsored byTAMKO®

    Built for Business: How Titan XT® Shingles Keep Proving Their Value

  • An overhead view of a residential block
    Sponsored byCBIZ CompuData

    From Spreadsheets to Strategy: How Roofing Companies Can Transform Financial Operations

  • Snow Guard Solutions for Metal Roofs by S-5!
    Sponsored byS-5!

    Safeguard Your Building: How Snow Guards Prevent Costly Roof & Property Damage

Popular Stories

The Home Depot is weighing a bid for GMS. The potential offer would pit the retail giant against QXO Inc.

UPDATE: Home Depot Pushes QXO Out of GMS Pursuit

Brad Jacobs, chairman and CEO of QXO, offers $5 billion to acquire GMS, a major distributor of gypsum and interior building products.

QXO Sets Its Sights on GMS in $5 Billion Offer

Undocumented workers make up 36% of the U.S. roofing workforce, leaving contractors and workers alike especially vulnerable.

Roofing is Left Exposed by Trump’s Deportation Flip-Flop

Roofing Contractor Webinar

Events

December 3, 2025

The Premier Roofing Conference: Best of Success

Join roofing professionals from across the nation at the 2025 Best of Success conference, the ultimate destination for roofing professionals seeking the latest industry insights and networking opportunities. Pick up strategies for critical challenges like workforce shortage with innovative solutions, explore the latest advancements in roofing technology and sustainable practices, and gain valuable insights from industry leaders on navigating the evolving roofing landscape.

View All Submit An Event

Related Articles

  • Smart Business: Random Tips on How to Run a Better Business

    See More
  • Smart Business: More Random Tips On How To Run A Better Business

    See More
  • 6 Tips On How to Lower Your Rising Accounts Receivables

    See More

Related Products

See More Products
  • business.png

    How to Succeed With Your Own Construction Business

  • performance

    Performance-Based Building Design: From Below Grade to Floors, Walls, Roofs, and Windows to Finishes, 2nd Edition

See More Products

Related Directories

  • SRS Building Products - Sugar Land

×

Be in the forefront of the roofing industry!

Join thousands of professionals today. Shouldn’t you know what they know?

JOIN NOW!
  • RESOURCES
    • Advertise
    • Contact Us
    • Directories
    • Store
    • Want More
  • SIGN UP TODAY
    • Create Account
    • eMagazine
    • eNewsletter
    • Customer Service
    • Manage Preferences
  • SERVICES
    • Marketing Services
    • Reprints
    • Market Research
    • List Rental
    • Survey/Respondent Access
  • STAY CONNECTED
    • LinkedIn
    • Facebook
    • Instagram
    • YouTube
    • X
  • PRIVACY
    • PRIVACY POLICY
    • TERMS & CONDITIONS
    • DO NOT SELL MY PERSONAL INFORMATION
    • PRIVACY REQUEST
    • ACCESSIBILITY

Copyright ©2025. All Rights Reserved BNP Media.

Design, CMS, Hosting & Web Development :: ePublishing