Insights

Four common types of construction contracts

Construction contracts form the backbone of any large construction project in Irvine. It is through construction projects that our state’s infrastructure is maintained and improved, adding to our state’s economy and quality of life. Construction contracts also provide the framework for the scope of the project, which property owners, contractors and subcontractors may find valuable. There are four common types of construction contracts. Type one: lump sum or fixed price contracts A lump sum or fixed price contract lays out the total cost for the entire construction project. This includes incentives for earlier completion or penalties for late completion. A lump sum contract is a good choice for situations where the parties have a clear idea on the scope of the project and have worked out a schedule that they both agree to. Type two: cost plus contracts Cost plus contracts cover the actual payment of costs and expenses derived from the construction project itself. These contracts contain specific terms laying out a percentage of material and labor costs as well as profit. These costs may be direct or indirect. A cost plus contract is a good choice when the scope of the project is outlined but not completed and

August 18, 2021

How arbitration can help resolve a dispute

Arbitration is an alternative to litigation for those interested in potentially saving money and time when compared to the oftentimes costly and time-consuming litigation process. It is helpful for anyone considering arbitration as an alternative dispute resolution option to know what it entails. How arbitration can help resolve a dispute Arbitration differs from litigation in some key ways. Arbitration is commonly viewed as a more streamlined alternative to litigation. Compared to litigation, which is typically goes before a judge, arbitration goes before an arbitrator who decides the dispute. Unlike a judge who is randomly decided to hear a lawsuit, the parties to the arbitration may be able to select an arbitrator that is mutually agreeable from a pool of potential arbitrators who will hear the dispute and decide on the dispute. In addition to being more involved it what is considered a more streamlined process, arbitration also has the added benefit of being a more private process. Unlike a lawsuit heard before a judge in court which creates a public record, arbitration proceedings are not public and are considered more private. Because it can be a more efficient process, arbitration can potentially save more than time and can also potentially

August 3, 2021

Construction defects and the statute of limitations

Almost everyone in California’s construction industry is familiar with the idea that they can be held liable for defects in their work. This can be true for architects and designers, as well as contractors and subcontractors, surveyors and others involved in the construction. Unfortunately, it’s less clear how long this liability can last. The statute of limitations for construction defects is complicated. A legal deadline A statute of limitations presents a kind of legal deadline. For instance, in a personal injury lawsuit arising from a car accident, the statute of limitations in California generally gives the injured party two years to make a claim. This means the injured party will likely be barred from filing suit against the other party unless they do so within two years of the accident. Most types of civil claims have a statute that imposes a time limit, but some provide more time than others. For some claims, the clock starts ticking on the day a problem begins, such as the day of a car accident. For other claims, the clock starts ticking the day the injured party learns about the problem. Patent and latent defects Under California’s construction defect laws, the statute of limitations

July 22, 2021

Many construction disputes stem from professional negligence

All parties involved in a construction project are legally required to use reasonable care when performing work. However, contractors are not the only ones with this legal obligation. The following parties on a project also owe a duty of reasonable care: Architects Engineers Project Managers Accountants Financial advisors Attorneys Proving professional negligence Professional negligence occurs when a professional on a construction project breaches the duty of care owed to a client or a third party, causing them to sustain damages. Damages to the property often are caused by design, material, and workmanship defects, which result in construction defects. Negligence may also result in delays or failure to complete a project, which could result in financial losses. Some examples of professional negligence in the construction industry include: Failing to follow building codes Failing to adhere to project specifications Failing to properly value a property Building a defective foundation Failing to obtain permits Misrepresenting the quality of work Failing to design a safe structure Failing to inform client of changes in tax laws Failing to use proper materials Providing inaccurate information regarding construction site Failing to provide adequate legal services The specifics of the duty owed to the client will depend on

July 6, 2021

What is a construction defect?

Construction projects in Southern California can be large-scale events that take time and many participants to complete. When a construction project hits a snag, however, the completion of the project can be threatened and the contracts that bind the parties together may be called into question. This post will identify some forms of construction defects that appear in California projects, but readers should remember that this post is not offered as legal advice. When questions regarding construction defects arise, individuals can reach out to their trusted construction litigation attorneys for advice and support. Recognizing construction defects There are several categories of defects that may appear in construction projects. Those categories include: Design defects: Defects that prevent projects from being up to code or meeting the specifications of the project. Subsurface defects: Defects with the ground the project is built on that threaten its stability. Construction or building defects: Defects related to the quality or care of workmanship provided in the building of the project. Material defects: Defects that present in the materials and supplies used to build a construction project. When a construction defect is found, it can create problems for every party related to the project. Support from knowledgeable

June 21, 2021

Mediation is a useful option to resolve disputes

When parties have a dispute and are unable to resolve it themselves, they may want to consider mediation. Mediation is a form of alternative dispute resolution and it occurs outside of court. It is generally less expensive, less formal and more time-efficient than going to court. The mediator is a neutral third party who helps the parties reach an agreement. The mediator does not impose a settlement on the parties. It is a confidential and non-binding process. Each party is required to sign an agreement stating that they will keep all discussions in the mediation confidential. Process The mediator will usually begin by explaining the mediation process, each stage, his or her role and the confidentiality requirements of each party. Then, each party will have an opportunity to provide an uninterrupted opening statement to explain his or her position and to hear the other side’s position. After the opening statements are complete, the mediator and the parties can ask questions and the mediator will usually have a private discussion with each side. These private discussions provide the parties with an opportunity to help the mediator understand their concerns and interests. The mediator can then help the parties decide the proposals

June 7, 2021

ADR: Choosing arbitration and the right arbitrator

Now that the courts have reopened after months of closures, we are beginning to see that the backlogs for all types of cases have increased exponentially. This is because most courts had backlogs prior to the slow-downs, remote work and shut downs of the past year, and those work stoppages only increased those backlogs, even on “routine” cases. This is why many people are looking to alternative dispute resolution models, and this is why so many are looking at arbitration and the right arbitrator. What is arbitration? In essence, arbitration is a courtroom alternative where a dispute is resolved privately, but the litigants still try their case before a neutral arbitrator who acts as the judge. This is often much faster and more cost-effective than traditional court litigation. And, during these times of extremely long court delays, arbitration has become the gold standard, while keeping all the traditional hallmarks of civil litigation. How to choose the right arbitrator? Unfortunately, many arbitrators have lost sight of why people choose arbitration. They have allowed their “court rooms” to devolve into the same litigation nightmare that litigants are trying to avoid. This is why when litigants are looking for the right arbitrator, they

May 26, 2021

Can a construction delay constitute breach of contract?

Construction projects can be expensive, and those who are depending on a project’s completion and see lost revenues for every day that the project isn’t completed. This is why timeliness in the construction industry is such a big deal. But regardless of your reputation and how hard you work, sometimes things get out of your control. While this may lead to nothing more than an inconvenient delay, in other circumstances it might leave you facing construction litigation. Construction delays and breach of contract A construction delay can be deemed a breach of contract. In some instances, construction contracts have a firm finish date which if not adhered to can result in a breach of contract. But even contracts that don’t specify a completion date can be subjected to a claim of breach if the project isn’t finished in a reasonable amount of time. This might be especially true if you’ve lost communication with the client or you’ve been pulled away from the project for a significant period of time. Defenses to a delay claim If you’re facing a breach of contract claim due to abandonment or delay, then you need to know your defense options. You might have several at

May 11, 2021

SB800 and construction defect claims

In the construction business, everyone from the general contractors and subs to the suppliers, engineers and architects are responsible for complying with agreed upon specifications for the project, as well as all local and state building codes. In California, when there are alleged construction defects, it is essential for both contractors and design professionals to know the laws that will protect them from being sued without have a chance to correct the defect, as well as the statutes of limitations for pursuing a claim. Having legal counsel that is experienced in the defense of construction defect claims in Irvine and southern California can help you to know your options. The Right to Repair Act Under the statute enacted by the California legislature in 2003, S.B. 800 or the Right to Repair Act, homeowners of newly constructed homes have the right to sue specifically for economic damages, and within the statute of limitations, if there are proven construction defects that are below the standards as described in the Act. The purpose of the law was to allow homeowners the option to pursue a non-litigated resolution of defect claims. Under the provisions of the law, the homeowner must first file a pre-litigation

April 28, 2021

Weighing the advantages of judicial reference

At a time when the California court system, already backlogged before the hiatus of in-court trials last year, is still facing challenges in balancing video-conferenced and in-person proceedings, less cumbersome and quicker alternatives may start to look more advantageous. Litigants who are willing to waive a jury but who do not wish to risk the outcome of an arbitration might want to consider judicial reference. Under the California Code, CCP § 638, the appointment of a neutral as a judicial reference referee allows parties to disputes of all kinds the advantages of flexible and speedy proceedings with full procedural rights. Sometimes called a special master or private judge, the judicial reference referee follows the established rules of evidence, discovery and right to appeal, and their decision carries the same force of law as a trial judge. Distinction from an arbitrator Just as with arbitration, judicial reference is often written into contracts either as a consensual referee or as a specific remedy in resolving disputes. Both methods also require both parties to agree to the neutral who will hear both sides and render a decision. But while arbitration is private, judicial reference is guided by all the rules and proceedings of

April 18, 2021