Breach of Construction Contract

Breach of contract suits is one of the most commonly heard cases in small claims courts. If you complete a job that you were contracted to perform but you aren’t paid for your services, that can be considered a breach of contract. Any contractor in the Milwaukee area who is facing a breach of construction contract should immediately seek the help of McDonald & Kloth.

What is a Breach of Construction Contract?

A construction contract is an agreement between two parties for a construction project. In the construction industry, contractors heavily rely on construction contracts to protect themselves legally from any possible loss.

After agreeing to the contract terms, both parties must fulfill the promises made in the contract. If that contract is breached by one party, then the other may sue for damages.

A contract can be breached when one of the following occurs:

  • One of the parties doesn’t perform their duties as promised.
  • One party does something that prohibits the other party from performing their duties under the contract.
  • When an employee does something prohibited by their job contract.
  • One party doesn’t perform within the time allotted.

As a result of the breach of contract, damages serve as the sum of money that compensates the financial losses suffered.

Types of Construction Contracts

Lump Sum Contract

A lump sum contract typically involves a total fixed priced for all construction related activities. One party agrees to pay the other a set dollar amount to complete the work according to the agreement. A lump sum contract is typically preferred as they do not require contractors to produce a complete breakdown of costs. Instead, all payments of the contract are based on the contractor completing all of the work as specified in the contract.

Cost Plus Contract

Under this arrangement, specific information is contained about a pre-negotiated amount covering the contractor’s overhead and profit. The contractor is reimbursed for the actual costs, purchases or other expenses directly related to the construction activity. Therefore, it is the owner’s duty to establish limits on how much the contractor will be billing.

Time and Material Contract When Scope is Not Clear

This type of contract is usually preferred when the project scope has not been defined or is not clear. Both the owner and the contractor must agree upon an hourly or daily rate and any other expenses that could potentially arise. In some cases, the owner might want to set a limit or specific project term to the contractor that must be met in order to reduce the owner’s risk.

Unit Price Contract

A unit price contract is commonly used by builders and in federal agencies. The risk of incorrect estimates of uncertain quantities for some key duties has been excluded from the contractor. In general, the contractor is paid for the actual quantity of each line item performed during construction. By providing unit prices, the owner can easily check that they’re being assessed un-inflated prices for services rendered.

We Represent Parties Throughout All Steps of the Construction Process

If you need legal assistance with a breach of a construction contract, the experienced construction attorneys at McDonald & Kloth, LLC can help. Contact us today by giving us a call or filling out our contact form.