Commercial Construction Contract Mistakes: Their Error, Your Problem

Here’s how subcontractors lose at job site dominoes. 

There are three blocks in a row:

  1. The Owner, who hires a Contractor or Construction Manager (CM)
  2. The Contractor or CM, who hires you
  3. The Subcontractor (i.e. you) 

Your subcontract is with the Contractor. If anything goes off schedule for reasons outside of your control, you make a claim to them. 

The CM has a contract with the Owner. If their work goes awry, and it’s not their fault, they’d make a claim to the Owner. 

That’s all well and good. 

Where you get into trouble is if your subcontract says your ability to recover a change order or claim depends on your customer (the contractor) recovering a claim from the owner. 

Because the thing is: Your CM’s error (or that of another subcontractor…) isn’t necessarily the owner’s problem.  

Truax Law Group - Construction Attorneys in Avon, OH - Commercial Construction Contract Mistakes

Here’s an example. 

Imagine you have a legitimate delay claim for putting in footers and slabs months later than scheduled because of numerous site work issues and delays beyond your control. 

You notified your customer of these delays as they were happening in a timely manner. 

But your contract states something like: 

“Subcontractor acknowledges and agrees that it shall only be entitled to additional compensation for any change order or claim if the Contractor successfully recovers compensation from the Owner…”  

And it turns out that the site work issues were not owner- or designer-related, and did not result from unforeseen site conditions. Instead, the delays were caused by the CM’s coordination issues. 

Do you think the CM is going to have any success getting a change order or making a claim to the Owner for any delay-related relief?  

NOPE!

And because your Subcontract conditions your right to relief on the CM having a claim honored with the owner, you potentially get nothing.

Don’t let your business get trapped under bad subcontract language. If you’d like help with your commercial construction contract, fill out our contact us form. Reference this article and you’ll get a complimentary consultation with one of our legal team members. You can also find more related information in our Guide to Avoiding Commercial Construction Contract Nightmares.