Construction Disputes
Given both the complexity and scale of construction projects, disagreements invariably arise, making it essential to understand the legal frameworks, common issues, and available remedies.
Construction projects are usually governed by contracts that outline the rights and obligations of all parties involved, including employers, contractors, and subcontractors. These contracts take various forms, including oral agreements, letters of intent, or standard-form contracts such as those provided by JCT, NEC, or FIDIC.
While oral agreements can be legally binding if the key elements of a contract are present, they often lack clarity and are more prone to disputes as a result. Letters of intent, though not binding in all respects, may impose obligations if performance has commenced. Standard-form contracts, widely used for their uniformity and clarity, address specific project needs, and provide mechanisms for managing risks and disputes.
Even where there has been careful planning using bespoke or standard form contracts, disputes frequently arise in construction projects due to their inherent complexity. With most projects there are often a myriad of parties involved: developers, banks, architects and other building professionals, contractors, subcontractors, and statutory bodies. Delays are among the most common issues, often caused by unforeseen circumstances, poor management, or contractor inefficiencies. Fundamental breaches, such as failing to perform essential obligations, can disrupt projects significantly, while late payments create cashflow challenges for contractors.
Defects, ranging from minor cosmetic issues to more serious structural problems, often require expert input to determine liability. Other common disputes involve final accounts, variations, and arguments over quality or performance standards.
Resolving construction disputes efficiently is critical to minimising disruption and preserving party relationships. If negotiation fails, statutory adjudication provides a quick and cost-effective resolution, for disputes covered under the Housing Grants, Construction and Regeneration Act 1996. Arbitration offers a private and flexible process for resolving complex or international disputes, while litigation remains a last resort due to its time and cost implications.
Construction disputes often require striking a balance between asserting contractual rights whilst looking for practical solutions to keep projects moving.