Common Legal disputes between builders and developers and some tips to minimise risks

Building and development projects are complex and involve significant financial investments. We are seeing more and more disputes between builders and developers being litigated.

Common Legal Disputes

1. Variations to the Contract
Variations to the building contract can arise due to changes in the client's requirements or unforeseen circumstances. Disputes can arise when parties disagree on the scope, cost, and timeline of variations.

2. Delays
Delays can occur due to various reasons, including poor project management, lack of resources, or unforeseen circumstances. Delays can result in significant financial losses for both parties and disputes regarding liability for the delay.

3. Defects
Clients have the right to expect that the building work will be free from defects and comply with building codes and standards. Disputes can arise when there are defects in the building work or non-compliance with building codes and standards.

4. Payment Disputes
Payment disputes can arise when there are disagreements regarding the payment terms and amounts. Builders may claim for additional costs, while developers may dispute the quality of work completed.

5. Termination of the Contract
Termination of the contract can occur due to various reasons, including non-performance, breach of contract, or insolvency. Disputes can arise regarding the validity of the termination and the entitlement to payment.

Minimising the Risk of Disputes

1. Clear Contract Terms
Clear contract terms are essential to minimise the risk of disputes. The contract should clearly define the scope of work, timelines, cost, payment terms, dispute resolution mechanisms, and termination clauses.

2. Regular Communication
Regular communication between builders and developers can help identify potential issues early and resolve them before they escalate. Open and honest communication can also help build trust and avoid misunderstandings.

3. Project Management
Effective project management is crucial to ensure that the project is completed on time and within budget. Builders and developers should work together to establish a project plan, monitor progress, and identify potential risks.

4. Compliance with Building Codes and Standards
Compliance with building codes and standards is crucial to avoid disputes regarding defects and non-compliance. Builders and developers should ensure that the building work complies with all relevant regulations and standards.

5. Dispute Resolution Mechanisms
Dispute resolution mechanisms should be included in the contract to provide a cost-effective and timely resolution to disputes. Mediation, arbitration, and litigation are common dispute resolution mechanisms that can be used to resolve disputes.

Conclusion

Legal disputes between builders and developers can result in significant financial and reputational damages for both parties. To minimise the risk of disputes, builders and developers should have clear contract term and regular communication. If you are involved in a building and development project, it is recommended that you seek legal advice to help you navigate potential disputes.