Contracts

Can I Fire my Contractor?

I often get calls from folks who are unhappy with contractors they’ve hired, wanting to know if they can terminate the relationship before the project’s completion.texas construction terminate fire contractor

Termination is typically allowed under any one of three circumstances.

First, does the contract specify the events under which termination may take place? If so, have those events occurred?

Second, did the contractor materially breach the contract and, if so, did that breach occur before any material breach by the owner (the party that contracted with the contractor)?

Third, will the contractor agree to terminate the contract early?

There are repercussions associated with terminating a contractor prematurely. A project owner is wise to take stock of the situation from an objective standpoint, evaluate the risks and benefits of each available option and their attendant consequences, and then move forward decidedly.

Our Tips & Resources posts are intended to provide general educational information. Like all other material on this blog, it is not a substitute for legal advice.

Is Time Always of the Essence in Construction Contracts?

Whether it’s the construction of a new shopping center or a new home, many people assume that a construction time of the essence construction contractproject will be completed by a particular date. For example, the owner of that shopping center may anticipate a date that he/she needs to have the space finished in order to market it and thereby obtain a stream of income to defray his/her expenses. The owner of that home-under-construction may be without shelter if the home isn’t built timely.

Questions often arise around whether a project, or benchmarks leading up to the completion of the project, must be completed within a specific timeframe. Does the construction contract state an explicit completion date? Does it define what exactly constitutes completion? Does it express that time is of the essence? What if the contract attaches a proposed schedule but has no other reference to a completion date? What if that schedule was only an estimate but the owner of the project nevertheless relied upon its accuracy in agreeing to hire the contractor, investing in the shopping center, or selling his/her old home?

In Texas, time isn’t ordinarily of the essence in construction contracts. Moreover, a stated date for performance does not imply or mean that time is of the essence. The contract must expressly make time of the essence or there must be something in the nature or purpose of the contract and the circumstances surrounding it making it apparent that the parties intended that time be of the essence. Otherwise, the contract must be performed within a reasonable amount of time. And a judge, jury, or arbitrator may have to determine what “reasonable” means.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.

 

 

Risk of Unknown Site Conditions on Construction Projects

Sometimes parties to a construction contract encounter conditions on the site that were unknown at the time they entered into their contract. Who bears the risk and expense of dealing with those conditions?texas construction unknown differing unforeseen site conditions

The general rule in Texas: a contractor who is paid on a lump-sum basis is not entitled to additional payment because differing site conditions are encountered and must be addressed.

Exceptions to the general rule may arise where there was fraud or mutual mistake, or the parties expressly agreed in their contract how to allocate such risk and expense.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more involved and complex discussions.

Payment Bonds v. Performance Bonds

texas construction law payment bond performance bondSome construction projects must be bonded. This requirement may be imposed by contract, statute, or both.

A surety issues a payment bond to guarantee that people furnishing labor and materials on the project are paid for their work. Accordingly, payment bonds primarily benefit contractors.

A surety issues a performance bond to guarantee that the project will be completed in accordance with contract requirements. Consequently, performance bonds primarily benefit project owners.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.

Mortgage Origination, Servicing, Holding, and Participation

texas mortgage loan real estate lawTo learn the mortgage market, one must understand the fundamental differences between mortgage origination, servicing, holding, and participation.

  • The company or individual who creates the mortgage loan is referred to as the originator.
  • The company or individual who collects loan payments and interacts with the borrower is the mortgage servicer.
  • The company or individual who owns the mortgage loan is known to hold the loan.
  • When more than one company or individual lend a portion of the entire mortgage loan, all such lenders are participating in the mortgage loan.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.

General Stages of the Architect’s Design Process

texas architect design service stages

DCF 1.0

The stages in which an architect furnishes design services to an owner of a construction project will vary according to the parties’ agreement. Generally speaking, however, an architect’s design services fall into five stages.

Schematic Design Stage. The architect prepares a preliminary evaluation of the owners’ program, schedule, budget, project site, and other information to ascertain the project’s requirements. After communicating with the owner, the architect prepares a schematic design showing the scale and relationship of the project’s components for the owner’s review and approval. The schematic design may include drawings, a site plan, preliminary building plans, study models, and fundamental building systems and construction materials.

Design Development Stage. The architect refines and further develops the schematic design documents in consultation with the owner to include plans, sections, elevations, typical construction details, and layouts of building systems to describe the size and character of the project as to architectural, structural, mechanical, and electrical systems, among other things. The architect submits these design development documents to the owner for review, discussion, and approval.

Construction Documents Stage. Next, the architect prepares construction documents that further illustrate and describe the information in the design development documents. Construction documents are composed of drawings and specifications that detail the quality levels of materials and systems and other requirements for construction of the project. The architect may also assist the owner in preparing bidding documents and other, necessary construction contracts. The architect provides the construction documents to the owner for review and approval.

Bidding or Negotiation Stage. The architect helps the owner obtain and assess bids for services and materials.

Construction Stage. The architect administers the construction contract.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.

Integrated Project Delivery System in Three Sentences

According to The American Institute of Architects, integrated project delivery is:

  • a project delivery approach that integrates people, systems, business structures and practices into a process that collaboratively harnesses the talents and insights of all participants to optimize project results, increase value to the owner, reduce waste, and maximize efficiency through all phases of design, fabrication, and construction.
  • distinguished by a contractual arrangement among a minimum of owner, constructor and design professional that aligns business interests of all parties.
  • characterized by key participants being bound together as equals, shared financial risk and reward based on project outcome, liability waivers between key participants, fiscal transparency between key participants, early involvement of key participants, jointly developed project target criteria, and collaborative decision-making.

texas construction integrated project delivery system

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.