Construction Law is a specialized area of legal practice integrating elements of Contract Law and Tort Law in the United States. Providing the rule guidelines for contractor bid on projects and construction work agreement, construction contracts outline the rules for performance on a job. Contractors and subcontractors bidding on a private or public construction project can benefit from contract drafting and negotiation by a licensed attorney. The assistance of an attorney will protect a contracting party from litigation or from a construction lien claim on a property. Law students learn how to represent a construction firm, contractor, subcontractor or owner’s interests in formation of a construction contract, as well as protecting a client from non-payment breach or other contract violations coinciding with cessation of work, environmental or safety violation.

Rules of Enforceability

The enforceability of a construction agreement must be consistent with the construction laws of a state. Refusal to perform in accordance with the duties of contractual agreement as a result of interference or cessation of work caused by the other contracting party, is a legal right. Contractors and sub-contractors are protected under contract law rules of “delay.” If a contractor or subcontractor terminates without notice therein, an active breach of contract may be subject to litigation, White v. Boutte, 392 So.2d 124 (La.App. 1 Cir. 1980). Failure of timely performance, or to complete a job as outlined in an agreement, may lead to passive breach of contract. Such matters may also form the basis for a legal claim, Southern Const. Co. v. Housing Authority of Opelousas, 197 So.2d 628 (La. 1967).

As with other commercial agreements, mutually assenting parties of construction contract must perform in a “bargained-for exchange” for the agreement to be legally binding. Lawful cause for consideration of an agreement must be exhibited with acknowledgement of the legal ordinances of the jurisdiction where the work will be performed. Duty to a reasonable standard of professional care, an element of tort law, establishes the liability of contractor parties forming an agreement. Contractors, subcontractors, developers, engineers, property owners, and suppliers party to an agreement may be liable for damages in cases where performance on agreement has failed. 

Construction Disputes

Construction lien claims begin with arbitration in most states. Due process rules for contract litigation generally demand arbitration before a claim is considered by the courts. Court-ordered specific performance is typically not a legal reason for assignment of damages in construction matters. Where a contractor has been found to be in breach of agreement or has been evidenced by the courts to have rendered defective performance, specific performance may be ordered. Remedies for a breach of construction contracts can include compensatory damages, specific performance, or combined damages where applicable.

Construction lien claims that have proceeded from arbitration to court may culminate in a property award. Damages may also be construed as “physical loss” in a construction law matter when a non-breaching party has sustained unforeseen liability. A party may also be awarded compensatory damages. Depending on the state, negligence calculus of the cost of lost enrichment on a job is the sum of revenues minus variable costs. Fixed costs (i.e. depreciation and overheads) are not normally deducted from the total gross revenues in calculation of a compensatory damage award, Rosbottom v. The Office Lounge, Inc., 654 So.2d 377 (La.App. 3 Cir. 4/5/95).

Parties of construction agreements can protect themselves from legal detriment by consulting a licensed attorney specializing in construction law. Students studying toward a law degree with emphasis in construction law will learn the contract terms to RFP bid proposals, prime contract, sub-contracts, regulatory compliance, and permit.

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