Construction breach of contract

Business Litigation · Construction

Four claims cover most construction litigation.

• Non-payment. Work performed and invoiced, payment withheld — sometimes legitimately, often not, and frequently blamed on a party further up the chain.
• Defective work. Workmanship or materials that do not meet the contract, the plans and specifications, or the applicable code and standard of care.
• Delay. Failure to complete on schedule, with liquidated damages, acceleration costs and extended overhead in play.
• Scope and change orders. Whether the work was included in the original price, and whether extra work was properly authorised.

Defences that decide cases

Prior material breach — the owner who stopped paying before the contractor stopped working. Failure to satisfy conditions precedent, including written notice and the opportunity to cure that most contracts require. Waiver, where a party accepted changed performance repeatedly without objection. Failure to mitigate. Limitations, which is generally four years but can be shortened by contract. And on residential projects, failure to follow the statutory notice and inspection process before suing.

Proving damages

For an owner: the reasonable cost to complete or repair, delay damages, and in some cases diminished value. For a contractor: the unpaid contract balance, the value of extra work, retainage, and costs caused by the owner's interference or delay. Both require records — original bids, actual costs, competing repair estimates and, in defect cases, expert testimony. Damages models built after the fact rarely survive cross-examination.

The contracts these disputes arise from

Prime contracts and subcontracts, certainly — but also the vendor and supplier agreements behind them, purchase and sales contracts for materials and equipment, and the non-compete and confidentiality agreements signed by people who have since left for a competitor. A project generates all of them, and a dispute rarely stays inside just one.

Missed deadlines

Failure to meet a critical milestone is the most common breach on a construction project and the most argued about, because schedules slip for reasons that are shared. Whether a missed date is a breach depends on what the contract made time-sensitive, what notice was given, whether the delay was excusable, and whether anyone was actually damaged by it. The party with the contemporaneous schedule records usually prevails.

Working out what it is actually worth

A damages model is built rather than asserted: direct costs, consequential losses that were foreseeable and not excluded by the contract, lost profits where they can be proved with reasonable certainty, and interest. Identifying every category early matters, because a claim narrowed at the start rarely widens later.

Attorney's fees and interest

Fees are recoverable on a valid contract claim under Texas statute, subject to presentment and the other statutory requirements, and prompt payment statutes can add interest on wrongfully withheld payments. Both change the settlement dynamics of a case that would otherwise be uneconomic to pursue.

Common questions