Judicial and administrative rulings on construction disputes can be cautionary tales. Through inadvertence or intentional corner-cutting, parties can create serious problems for themselves. The three cases covered in this issue involve contractor misjudgments: paying a subcontractor off the books, ignoring a claim filing deadline, and failing to use a written contract.
A contractor in North Dakota hired a crew to assist with a commercial roofing project and paid the workers with cash. Inspectors, who visited the work site in response to a safety complaint, questioned the workers compensation insurance coverage for everyone at the site. The contractor and its individual owner were held liable for the insurance premiums and penalties for the entire crew.
A contractor on a federal project in Wyoming requested a price adjustment for alleged changes in the scope of work. The government agency negotiated and audited the contractor’s overhead rate. Negotiations continued. By the time the contractor submitted a proper, formal claim, the statutory claim deadline had passed. The government’s active participation in negotiations did not extend the deadline.
A contractor in Alabama entered into an agreement for residential repairs but did not put the contract in writing, as required by the state licensing statute. The homeowner refused to pay for the completed work. The contractor was fortunate—a court ruled that the sanctions for violating the statutory written contract requirement did not include inability to recover payment for the work.