Construction firms and independent professionals often have symbiotic working relationships. Construction companies may not have enough regular work for highly-skilled specialists. They do not want to extend full-time employment to professionals who install tile or perform other common construction labor.
Instead of directly hiring skilled professionals, subcontracting with them is a common practice. Many professionals run their own small businesses or work as independent contractors. They take on responsibility for specific aspects of construction projects through subcontractor arrangements with other businesses.
Typically, the companies hiring subcontractors have specific expectations for the construction timeline and the quality of the work provided. Particularly when working with a subcontractor who has provided support services before, companies may take for granted that the work performed should meet company standards.
What options do construction firms have when subcontractors do not fulfill their obligations and undermine the success of a major construction project?
Withholding pay is a common tactic
Frequently, construction businesses and professionals accept partial down payments and then demand the remainder of their compensation upon the completion of a project. These arrangements give clients and businesses hiring subcontractors leverage.
Refusing to remit the final payment until the completion of the work can help motivate a subcontractor to prioritize a project that they have delayed. In cases where a subcontractor performs substandard work or uses cheaper materials than those required by the clients, withholding payment can also be an appropriate response. Subcontractors may agree to redo work to receive their wages.
Unfortunately, especially in cases involving complaints about the quality of materials or labor provided, subcontractors denied final payment can sometimes pursue liens against the client’s property, which can cause a variety of different challenges.
Pursuing breach of contract litigation
When there is reason to worry about a subcontractor seeking a lien and damaging the relationship that a business has with a client, issuing final payment may be necessary to prevent legal conflict. However, the construction firm that hired the subcontractor can then potentially proceed with a breach of contract lawsuit.
Documenting delays in project completion, deviation from current professional standards and violations of contractual terms can help structure firms convince the courts that a subcontractor did not fulfill their obligations. The courts can offer financial relief to the hiring construction company in some cases. Those funds can help cover the cost of redoing or completing the work. The courts can also order specific performance, effectively forcing the subcontractor to fulfill their contractual obligations.
The circumstances surrounding a subcontractor dispute can help construction companies pursue the best solutions available. Litigation is sometimes the most effective option when subcontractors do not uphold their professional obligations.