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Don’t Fire Your Contractor for the Wrong Reasons

If you are having problems with a general contractor and want to hire a different one for the project; you should tread carefully. Regardless as to how justified you feel in doing so, always look carefully at the reasons why you want to fire your contractor. Terminating a general contractor should only be done when there is a well-documented history of conduct that is clearly in violation of their duties and responsibilities pursuant to the contract. If that is not the case, you may be sued for wrongful termination and have to pay large monetary damages. You should always consult a construction lawyer before you fire your contractor.

A recent case involved a building owner who terminated his contractor because the contractor failed to timely meet milestones on the project. However, the parties’ contract did not have any specific time requirements or work schedules, and the replacement contractor’s contract also did not have any time requirements or schedules. In addition, when the original contractors pace of work was compared to the replacement contractor’s schedule, the replacement contractor worked at the same speed as the original contractor. Without specific deadlines in the contract – the court held that the work only had to be completed in a reasonable time under the circumstances, and the building owner had wrongfully terminated the contract.  

A frequently given reason for terminating a contract is defective or shoddy work. Does the contract have a notice to cure provision? If you fail to give your contractor sufficient notice, you may be the one breaching the contract. If you fire your contractor without giving him an opportunity to cure any defects, he may be entitled to damages. Even if your contract does not have a specific notice provision, as a matter of fairness and equity, it still is a good idea to give notice. A good practice is to look at the relevant American Institute of Architects (AIA) contracts and give notice and an opportunity to cure consistent with what is standard in the industry. This practice also is an opportunity to further document what you think the problems are and how you want them corrected, and determine what the other party intends to do about them. If you go to Court or arbitration, one of the elements of the analysis will be the extent to which everyone communicated about the problems and the solutions. If you alone are aware of defective work, and you fail to communicate your concerns, the trier of fact could find that you accepted the work.

Of course, there are reasons where the owner is on safe ground in ending the working relationship. Those reasons are that the contractor is unable to complete the contract, the contractor simply abandons the job or the contractor commits fraud involving the project.

Don’t let your personality conflict with the contractor cloud your good business judgment. Your primary goal is to complete the project within budget. Having to fire your contractor almost always results in higher costs and delays. If you don’t do it right, you could wind up being forced to pay for the contractor’s opportunity cost-the time he set aside for this project.

Always speak to a construction lawyer before you fire your contractor.

 

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