A common view in the construction industry is that one in twenty projects will be potentially problematic. When it comes to subcontracting, the problems can be multiple, ranging for example from a delay attributable to another shift of work, through a dispute with the general contractor over payment. Although discussion is often the first and best line of defense, it is important that construction contractors review and update their company contracts on a regular basis, in order to improve them and guard against possible problems. From this perspective, it is also important to ensure that each contract, whether it emanates from the general contractor or the subcontractor, reflects the specifics of the project to which it applies. Sadly, entrepreneurs often treat their contracts like a will and only revise them in the event of a dispute, in other words: when it is too late. The purpose of this article is to help subcontractors detect potential problems that may arise from the provisions in their contracts.
A large part of the disputes that arise in the construction industry result from an imprecise or too rigid description of the scope of work. In the context of fixed price contracts, which are heavily used for subcontracting work, the fixed price remains the same, although changes have been made to the conditions of execution initially foreseen. Thus, although the contract describes the planned work in a suitable manner, it is often neglected to take into account the work that will be performed by other trades and that could have unforeseen impacts on the performance of the contract by the subcontractor by question.
Let’s take the following situation as an example: while a heating, air conditioning and air conditioning (HVAC) subcontractor finishes installing ducts, the general contractor requires that these be removed, moved and reinstalled in another location. , to take into account a new partition not appearing in the initial plans. In this example, the subcontractor’s contract, although lump-sum, should contain a provision allowing the additional cost generated by this modification to be calculated, both in terms of time and new materials required, and of materials returned. unusable by change.
In addition, with regard to irregularities or poor workmanship that may be attributable to the subcontractor, it could be useful for the subcontracting contract to provide for the need for a notice, the procedure to establish whether it is indeed faulty workmanship falling within the scope of the subcontractor, as well as the possibility for the latter to observe and remedy this potential fault himself. Although the contractor is required by law, in most cases, to allow his subcontractor to correct his poorly executed work, it is relevant to provide for such a mechanism in the contract, in the manner of standard contracts. of the CCDC, in order to clarify the applicable procedure and avoid the litigation of the dispute.
Such a provision could prove particularly useful in several respects, if only to avoid being singled out for delays in the critical progress of the project and attributable to the corrections of defects, when these are not denounced by the general contractor in accordance with the notification procedure. Also, by allowing the subcontractor to correct his work himself, such a provision could prevent him from having to pay the general contractor the additional costs resulting from the correction, when it is carried out by another subcontractor.
By taking the time to review your contracts and take your past experiences into account when updating them, you will be able to anticipate and possibly avoid future problems that may arise on a job site. Do not hesitate to contact one of our lawyers in construction law for any question relating to the drafting, negotiation or execution of a subcontract.
Written by Samuel St-Jean and Jeremy Power.
About the authors: Me Samuel St-Jean is a partner in the Montreal office of Cotney Construction Law, LLP. Me St-Jean practices mainly in civil and commercial litigation, particularly in construction law, injunctions, commercial and residential leases, or in the context of litigation between shareholders. He also assists several small and medium-sized businesses in corporate law, in addition to drafting and revising business or service contracts. Contact: email@example.com .
Me Jeremy Power is a partner in the Toronto office of Cotney Construction Law, LLP. Me Power practices mainly in construction law, public law, corporate law and commercial law, as well as in real estate. Me Power also assists several small and medium-sized businesses in the strategic planning of their business, in the review and drafting of contracts, as well as in negotiation. Contact: firstname.lastname@example.org .
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