You don’t have to be a construction company to face a construction dispute – any business that builds, renovates, leases or develops a property can find itself dealing with disagreements over contracts. The good news is that not every construction dispute has to end up in court.
With the right legal advice, explains John Siwiec of Perley-Robertson, Hill & McDougall LLP, businesses can address problems early, negotiate a resolution and, when necessary, prepare for litigation or arbitration.
Where disputes often begin: The scope of work
A construction project can go off track quickly. A change in scope, an unexpected delay, a payment dispute or disagreement over the quality of work can turn into a costly legal battle.
“One of the most common disputes is about the scope of work, and what is included or not included in the original contract,” says Siwiec, a partner at the firm. “In some cases, there may be side conversations between the parties that didn’t make it into the contract. So weeks or months down the line, when an issue arises, if it’s not in writing, that’s when problems can happen.”
The importance of documenting everything
Good documentation can help prevent a disagreement from becoming a larger dispute. Emails, letters, design documents, change orders and meeting minutes can provide a record of what was discussed, decided and agreed to throughout a project.
“The best thing parties can do is to be sure to leave a paper trail throughout the lifecycle of the project. Parties have to be diligent in documenting everything and getting approval on the content. For example, if one of the parties is taking meeting minutes, it’s critical that those minutes are approved by all parties,” says Siwiec.
He also recommends dealing with problems as they arise rather than allowing them to build.
Construction projects move quickly, and payment and other deadlines can arrive before a party has had time to address an issue. A problem left unresolved can cause costly project delays and take months or years to settle.
Construction Act payment rules override the contract
Everyone involved in a construction project needs to understand the prompt payment rules under Ontario’s Construction Act. “The act sets mandatory deadlines for payment that take precedence over the terms in a contract,” adds Siwiec.
Generally, an owner has 28 days to pay a proper invoice or 14 days to give notice that payment is being withheld and explain why. Similar deadlines apply between contractors and subcontractors further down the construction chain.
These deadlines matter because missing one can affect a party’s legal rights and options. When a payment issue arises, businesses need to know what is required of them and act within the applicable deadlines. Getting legal advice early can help businesses avoid costly mistakes and protect their position.
Local roots, broad legal expertise
As an independent, full-service Ottawa law firm, Perley-Robertson, Hill & McDougall brings local expertise in construction, corporate, real estate and litigation law. Its construction lawyers work with owners, project managers, contractors, subcontractors, financial institutions and design professionals, while its broader real estate and business law practice covers everything from contracts and financing to claims and litigation.
For businesses undertaking a construction project, having access to that range of expertise can help identify potential problems early and address them before they become costly.
This article does not constitute legal advice. Readers should contact Perley-Robertson, Hill & McDougall for advice regarding specific construction law matters.
