Hiring Dependable Contractor

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.

 

 

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.

Overview of Construction Contract Pricing Methods

texas construction contract pricing method mechanismIn conjunction with selecting the project delivery system, the owner of a construction project must consider the mechanism used to determine the contract price and the contractor’s compensation. Generally speaking, there are four construction contract pricing methods.

First, under a fixed-price or stipulated-sum contract, the contractor agrees to perform a specific scope of work for a predetermined, fixed sum.

Second, under a cost-plus contract, the owner pays the contractor for the cost of the work plus an additional sum (often represented as a percentage of the project’s cost) for the contractor’s overhead and profit.

Third, under a cost-plus with guaranteed maximum price agreement, the owner agrees to pay cost-plus up to an agreed-upon maximum sum, beyond which the contractor bears the financial burden.

Fourth and finally, under a unit-pricing contract, the owner pays the contractor a fixed amount for certain units of material/labor used on the project, rather than paying a fixed total for all material/labor used on the project.

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.

Construction Contract Administration in Three Sentences

The phrase construction contract administration refers to a variety of services that assist the owner of a construction project and the general contractor in implementing, maintaining, and concluding the project, along with providing some limited oversight functions.

Often, the owner of the construction project contracts with the same architect who designed the project to perform these services.

Examples of contract administration services, from the AIA’s B101 agreement between the owner and architect, include advising and consulting with the owner during the course of the project, performing site visits and generally evaluating the work to determine if it accords with the contract documents, working with the owner to provide necessary submittals to the appropriate governmental authorities, interpreting and deciding matters concerning performance under the contract documents, serving as an initial decision-maker in matters of dispute between the owner and general contractor, and reviewing and certifying amounts due to the general contractor.texas architect construction contract administration

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.

So What Exactly Do You Need to See? (Required Inspections — Part 2)

texas required inspectionsCertain aspects of the construction process must be inspected by the authority having jurisdiction over the development process. A general overview of required inspections is here. In that post, we listed mechanical, electrical, and plumbing as examples of different inspections that may be necessary. But what specific inspections are required?

It depends on the applicable law. In the City of Dallas, at least of the time of this post, a person may reasonably expect the following:

A. Required Building Inspections

  1. Foundation
  2. Rough frame
  3. Finish frame
  4. Insulation
  5. Final building

B. Required Electrical Inspections

  1. Temporary construction power pole
  2. Rough (when any electrical equipment or wiring is to be hidden from view by any permanent portion of the building or by burial)
  3. Final (after structure is completed)

C. Required Plumbing Inspections

  1. Rough (when any sewer, gas, or water piping is to be hidden from view)
  2. Final (after structure is completed)

D. Required Mechanical Inspections

  1. Rough and duct (before work is concealed from view by a permanent portion of the structure or by burial and before ducts are insulated)
  2. Final (after structure is completed)

E. Required Irrigation Inspections

  1. Rough (performed by reviewing irrigation designs and inspecting prior to the concealment of irrigation piping, control valves, and wiring)
  2. Final (after structure is completed)

F. Special/Other Inspections

  • A building official may also make or require any other inspection of any construction work to ascertain compliance with codes and ordinances

So, what do you think? Overkill or a good idea to have these systems reviewed?

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.

Can a Building Inspector Arrest You?

In previous posts we defined building permits and talked about when they are necessary.

failure to get building permitWhat happens if you build or renovate without securing a required permit? The answer varies because the law that applies to the project varies. But, generally speaking, a building official could issue a stop order and the owner and/or contractor could be subjected to criminal and civil actions. Monetary penalties often accrue on a “per day” basis. So they may become substantial very quickly, especially in relation to what it would have cost to get the permit in the first place. What’s more, there is also the potential that the property will have diminished market value. Raise your hand if you’d like to buy property that you knew wasn’t inspected as required.

Can a building inspector arrest someone who does not obtain a permit? A building official can issue and seek legal orders that, if not complied with, may ultimately result in an arrest by the appropriate law enforcement agency.

Remember: the job of building officials and inspectors is to help ensure that construction projects are completed according to certain safety standards. As Ben Franklin said, an ounce of prevention is worth a pound of cure. Get the permit when required.

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.