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Contractor Default

Construction projects in Massachusetts rely heavily on contractors. Most of the time, the work gets done and payment comes through. However, there are situations where the general contractor or property owner becomes convinced that a contractor has not fulfilled their obligations and are in default under the contract.

These disputes can be very sensitive if there is still work to be done on the project, but also very costly: If the work is not up to standard, it can costs tens of thousands of dollars to make it right, and can add months to the project's completion date.

The construction litigation lawyers at the Katz Law Group have decades of experience resolving these disputes, representing both property owners and general contractors, as well as the contractors accused of defaulting.

Avoiding a Default Through Negotiation or Mediation

A construction business can rise or fall through a single project, so getting the job done is high on everyone's list of priorities. When there seem to be problems with a contractor's work and people start accusing them of not fulfilling their promises, it can imperil the entire project and threaten everyone involved.

Avoiding full-blown litigation is often in everyone's interests. Negotiating the dispute can produce compromises that push the project towards completion without putting all of the losses on one particular party. In many cases, negotiations can even produce resolutions that are more beneficial than the original plans had been.

Even if negotiation does not settle the dispute, there are still other ways to reach a resolution without going to court. Mediation or arbitration can put a neutral third party between the contractor and the party accusing them of defaulting on the contract. Both parties can present their side of the story and agree to be bound by the decision of the arbitrator, or let a mediator suggest potential resolutions that they had not thought of, before. Many arbitrators and mediators focus their business on construction disputes like contractor defaults, making them well-versed in what is at stake and the interests at play.

Many construction contracts actually require disputes to be handled through mediation or arbitration, rather than litigation.

Preparing for Litigation

In some situations, though, it is clear that litigation is on the horizon and cannot be avoided. In these cases, parties would do well to prepare for this eventuality as early as possible to put themselves in the best position they can for when the lawsuit is finally filed.

For property owners and general contractors, this often means taking due diligence to:

  • Provide written notices to the party in default
  • Fully explain what acts are necessary to cure the breach
  • Find replacement contractors, should the defaulting party not comply
  • Determine the amount of damages that are at stake
  • Make reasonable compromises to the defaulting contractor, to show that a good faith effort was made to complete the project

For contractors who are being accused of defaulting, this often means:

  • Quickly and thoroughly responding to the other party's allegations
  • Explaining why there is no default or, in the alternative, why the default has happened and what is being done to fix it
  • Making reasonable compromises to the head of the project, to show that there was a good faith effort to move forward

If no resolution is found, the lawsuit may be filed and the case will go to court for a judge and jury to decide whether there was a default or not.

Potential Outcomes from Litigation

Should the case go to trial, there are several potential outcomes:

  • The contractor was not in default, taking the contractor off the hook for whatever work they allegedly did not complete, and forcing the project manager to look for alternatives to correct any issues they still have with the results
  • The contractor was in default, and the court issues an order for specific performance, telling them to comply with the project manager's work standards
  • The contractor was in default, but the court issues an equitable adjustment of the contractor's obligations – basically a forced compromise – so the work can go on

If the contractor was found to be in default by the court, and then the contractor does not comply with the court order, they may have to compensate the owner or general contractor for the costs of completing the work.

Massachusetts Construction Litigation Lawyers at the Katz Law Group

The construction litigation attorneys at the Katz Law Group have over 35 years of experience representing contractors, project managers, and property owners in contractor default disputes. Contact them online or call them at (508) 480-8202 for help in Worcester, Marlborough, Framingham, or the rest of Massachusetts.

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