Common Legal disputes between builders and developers and some tips to minimise risks
Building and development projects are complex and involve significant financial investments. We are seeing more and more disputes between builders and developers being litigated.
Common Legal Disputes
1. Variations to the Contract
Variations to the building contract can arise due to changes in the
client's requirements or unforeseen circumstances. Disputes can
arise when parties disagree on the scope, cost, and timeline of
variations.
2. Delays
Delays can occur due to various reasons, including poor project
management, lack of resources, or unforeseen circumstances. Delays
can result in significant financial losses for both parties and
disputes regarding liability for the delay.
3. Defects
Clients have the right to expect that the building work will be
free from defects and comply with building codes and standards.
Disputes can arise when there are defects in the building work or
non-compliance with building codes and standards.
4. Payment Disputes
Payment disputes can arise when there are disagreements regarding
the payment terms and amounts. Builders may claim for additional
costs, while developers may dispute the quality of work
completed.
5. Termination of the Contract
Termination of the contract can occur due to various reasons,
including non-performance, breach of contract, or insolvency.
Disputes can arise regarding the validity of the termination and
the entitlement to payment.
Minimising the Risk of Disputes
1. Clear Contract Terms
Clear contract terms are essential to minimise the risk of
disputes. The contract should clearly define the scope of work,
timelines, cost, payment terms, dispute resolution mechanisms, and
termination clauses.
2. Regular Communication
Regular communication between builders and developers can help
identify potential issues early and resolve them before they
escalate. Open and honest communication can also help build trust
and avoid misunderstandings.
3. Project Management
Effective project management is crucial to ensure that the project
is completed on time and within budget. Builders and developers
should work together to establish a project plan, monitor progress,
and identify potential risks.
4. Compliance with Building Codes and
Standards
Compliance with building codes and standards is crucial to avoid
disputes regarding defects and non-compliance. Builders and
developers should ensure that the building work complies with all
relevant regulations and standards.
5. Dispute Resolution Mechanisms
Dispute resolution mechanisms should be included in the contract to
provide a cost-effective and timely resolution to disputes.
Mediation, arbitration, and litigation are common dispute
resolution mechanisms that can be used to resolve disputes.
Conclusion
Legal disputes between builders and developers can result in significant financial and reputational damages for both parties. To minimise the risk of disputes, builders and developers should have clear contract terms and regular communication. If you are involved in a building and development project, it is recommended that you seek legal advice to help you navigate potential disputes.