Table of Contents
In Short
- Construction disputes can arise from issues like payment delays, contract interpretation, and financial claims due to project disruptions.
- Financial disputes often involve unpaid invoices or disagreements over project costs.
- Adjudication, a fast and cost-effective alternative to litigation, allows a third-party expert to make an enforceable decision.
Tips for Businesses
When facing a construction dispute, consider alternative dispute resolution methods like mediation or adjudication. These can save time and money compared to litigation while ensuring the project can continue smoothly.
Running a business can involve many tasks, such as choosing contractors and making decisions about marketing materials. Unfortunately, as a business owner, you can have more complicated issues. For example, dealing with commercial disputes. This could involve a construction dispute or a disagreement between you and another party over an issue in the construction industry. This article will, therefore, explain how to navigate construction disputes and give business owners legal insight.
What are the Different Types of Construction Disputes?
A range of types of construction disputes can occur in the construction industry. As you likely know, the construction industry is a complicated business area, so it has the potential for various tricky disputes. These include, for example:
- latent and patent defect disputes;
- project delays and disagreements;
- financial disputes;
- contract interpretation disagreements;
- contractual disputes concerning the transfer or assigning to new parties;
- disagreement over terms implied under the Construction Act 1996;
- contractor work suspension disputes;
- party wall disputes;
- professional negligence disputes; and
- construction insurance disputes.
There is no scope in this article to go into detail regarding all of the above. However, a good dispute lawyer can help you if you fall into a construction dispute. Instead, we look at financial disputes, as shown in the example below.
What Might Financial Construction Disputes Concern?
A financial construction dispute could cover various issues. One final construction dispute that may come to mind is a payment dispute. This can arise due to nonpayment of invoices, causing cash flow issues and delaying the construction work.
Another area of dispute regarding finances is over loss and expense claims. These can occur when a project suddenly has to change or is disrupted, which can mean more costs arise. These claims may be:
- a disruption claim; or
- a prolongation claim, which is where the construction project timeline is lengthened.
A financial construction dispute can alternatively involve claims for loss of profits due to the inability to agree on a fair and reasonable amount for these costs. In addition, final accounts, including all the construction costs, can come into dispute. Disputes can also arise regarding construction project costs, such as when variations occur to the original work.
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Can I Resolve a Construction Dispute?
As you can see, your construction business could fall into a range of construction disputes.
Therefore, although one way to resolve a construction dispute is through litigation, a good solicitor will help you avoid this. Consequently, you may want to try to resolve your construction dispute through an alternative dispute resolution such as:
- negotiation;
- mediation;
- arbitration;
- dispute review boards; or
- adjudication.
What is Adjudication?
One popular way to resolve a construction dispute is through adjudication, which you may hear people refer to as ADR. Adjudication is useful because it can be carried out relatively quickly, which is important so that a construction project can continue to the next stage.
Adjudication involves an adjudicator, a third party to the dispute, deciding the issues in dispute. The adjudicator will usually be someone with expertise in the area, such as a:
- quality surveyor;
- architect; or
- lawyer.
Once the arbitrator has decided on the issue in dispute, the parties will usually follow their decision, as it is an enforceable decision. However, if they agree not to follow the decision, the dispute could escalate to arbitration or commercial litigation.
This guide outlines how to resolve commercial disputes.
Key Takeaways
As a construction business, you could face a construction dispute. When doing so, you could disagree over various construction issues as this industry is complex. For example, you could have a construction dispute regarding a party wall or with one of your contractors. You could also face a construction dispute over something financial. This can occur due to different issues, such as an invoice not being paid or loss and expense claims due to a disruption in a construction project. If you face a construction dispute, you must know how to resolve it. One popular way is through adjudication, which can avoid costs and time associated with litigation. An expert third party will resolve the issue with a decision you will usually both follow.
If you need help understanding construction disputes, our experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
A construction dispute is a disagreement in the construction industry which can be over different issues, such as a disagreement over terms implied under the Housing Grants, Construction and Regeneration Act 1996.
You can resolve a construction dispute in various ways, which can include litigation or adjudication, for example.
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