Have a Contract Dispute? #erwinlawanswers

Whether you’re a contractor or a customer, having a contractual dispute can be difficult. And confusing. It’s not always easy to understand what to do, if, and or how to enforce contractual provisions, or, if need be, pursue damages.

There are a number of ways to resolve such disputes, but  the resolution of any particular dispute depends both on the language of the specific contract itself, as well as certain statutory remedies that may be available in Illinois.

If a dispute materializes, best practices generally include either enforcing contractual provisions, utilizing statutory remedies such as mechanics' liens or performance bonds, and/or seeking damages for the cost of completion or correction.

That said, preventing a dispute from becoming intractable in the first place is an even better strategy.

Here are some things to keep in mind:

Communication is Key

No matter which side of a dispute or potential dispute you are on, clear communication with the other party is important at all stages of a growing disagreement.  Most disputes can be avoided with a concise contract that sets forth the scope of work to be performed, the manner in which it will be performed, and a reasonable estimate of the time-period in which it will be performed, with specific provisions for unexpected contingencies that may arise.

Document, Document, Document

Save all communications, whether text messages, voicemails, photos, videos, emails, or written letters or notes.  Take photos of work performed, and document work left to be completed, or work completed by another replacement contractor.  Whether the dispute turns into litigation or not, appropriate and proper documentation at each stage of the process is essential to resolving any possible dispute that may occur with evidence of each claim or assertion you may need to make along the way.

Termination of the Contract

An owner may terminate a contract and seek damages for the cost of completing the work. For example, if the contractor defaults or fails to perform, the owner may hire another contractor to complete the work and recover the additional costs incurred from the original contractor. This is supported by provisions in construction contracts that allow owners to deduct completion costs from unpaid balances or seek reimbursement for excess costs.

In most residential cases, this requires written notice by certified mail, as outlined in the Home Repair and Remodeling Act. Contractors doing home remodeling especially need to be aware of the statutory requirements of a home repair and remodeling contract pursuant to the Act.

Likewise, a contractor may need to cease performing work under a contract that is behind on payment, and may want to consider terminating the contract or withholding additional work until satisfaction.

The most appropriate remedy will depend largely on how a contract is written and what contractual and statutory provisions might apply to non-payment, such as the Illinois State Prompt Payment Act.

The Mechanics Lien Act

According to the Mechanics Lien Act, premises may be sold to satisfy claims, and damages may be deducted from the contract price.

Section 4 of the Mechanics Lien Act provides that if an owner breaches a contract or causes it to be abandoned, the contractor is entitled to a lien for the value of the work performed, including labor, materials, fixtures, or machinery. The contractor can include in their lien claim not just the value of work already done, but also damages for the loss of anticipated profits on the uncompleted portion of the work.

Performance Bond

A customer may pursue claims against a contractor's performance bond, if applicable, to ensure completion or recover costs, especially in situations where the customer may be a political subdivision of the government.

While it’s important to understand the basics of contract law, it is essential to work with an experienced attorney who can create appropriate contracts, and guide you through a dispute, if necessary. At Erwin Law, we’ve been helping both customers and contractors resolve these types of issues quickly and as painlessly as possible. Call us at 773-525-0153 and let our experienced litigators walk you through the process, one step at a time.