Construction Law

Construction law is a multifaceted specialty incorporating numerous legal disciplines. At the heart of construction law is the negotiation, formation, and enforcement of the construction contract. Construction law contracts typically spell out the timeline for project completion, the payment schedule, the method to be used for dispute resolution, and the penalties for noncompliance. Construction contracts may be stipulated sum contracts where the contractor agrees to provide specified services for a specific price and the owner agrees to pay upon completion or according to a set payment schedule. Some construction contracts are cost-plus contracts where the contractor's profit is fixed. In a cost-plus contract, the owner pays any cost overruns and pockets any cost savings. Engineering, procurement, and construction (EPC) contracts are turnkey arrangements under which the contractor agrees to deliver all negotiated services and bears the risk for any cost overruns.

Key construction law contractual provisions often deal with the enforceability of warranties, liquidated damages, waivers of subrogation, indemnity agreements, and limitations on liability. Construction law contracts also specify the necessity of insurance and performance bonding. Construction disputes may be resolved through mediation, arbitration, or litigation. The contract typically specifies the required mode for dispute resolution. It also usually specifies the types of damages to be paid in the event of a breach. A liquidated damages clause often cites a specific dollar amount that must be paid in the event of a particular breach. The enforceability of liquidated damages clauses is often litigated with many courts requiring that the liquidated damages be reasonable in proportion to the actual damages caused by the breach.