In the construction sector, legal disputes with subcontractors and suppliers can become real headaches for developers and construction companies. Beyond the financial costs and construction delays, litigation can damage your reputation and jeopardize the continuity of your business. How can you anticipate and avoid these problems? The key is to fully understand the types of liability and implement rigorous, preventative management.
What is the difference between contractual and non-contractual liability?
Contractual Liability
This occurs when one of the parties fails to comply with the terms of a contract. Imagine a supplier delivering materials after the deadline, or a subcontractor failing to adhere to the agreed technical specifications. In these cases, you can claim compensation based on the agreement. The contractual relationship is the foundation, and anything not covered in the contract can become a weak point.
Extracontractual Liability
This refers to damages caused to third parties not involved in the contract. For example, if during the execution of the work, scaffolding falls and damages a car parked on the street, or if an excavation causes leaks in the adjacent home. In these cases, liability may arise from negligent conduct, although the application of strict liability criteria is increasingly common in the construction sector.
Main Causes of Litigation in Construction
Have you ever encountered any of these problems?
Failure to meet deadlines or quality standards.
Late or non-payments.
Defective materials or poor workmanship.
Ambiguous, incomplete, or even nonexistent contracts.
Lack of supervision and monitoring during construction.
These scenarios are more common than they seem, and although they sometimes seem inevitable, they can be prevented with proper management.
Practical strategies to prevent conflicts
1. Clear and Detailed Contracts
The contract is your best legal shield. Leave nothing to interpretation: precisely define the purpose of the contract, the required quality, delivery times, and penalties for non-compliance. Include mediation and arbitration clauses to facilitate out-of-court dispute resolution. Regulate the obligations and responsibilities of each party in detail and ensure that both parties understand and accept all the terms.
2. Due Diligence Before Contracting
Before signing with a subcontractor or supplier, investigate their solvency, experience, and reputation. Have they had previous litigation? Does they comply with current regulations? Ask for references and verify that they are up to date with their tax and labor obligations. A small effort beforehand can prevent major problems in the future.
3. Constant Supervision and Control
It’s not enough to sign a good contract; it’s essential to rigorously monitor the execution of the work. Schedule regular meetings, document progress, and record any incidents. Use minutes, emails, and photographs to document everything. This documentation will be key if a conflict arises.
4. Open and Proactive Communication
Most problems are exacerbated by a lack of communication. If you detect a problem or a change in the project, inform all involved parties immediately. Establish clear communication channels and encourage teamwork. A simple, timely call can prevent costly litigation.
5. Regulatory Compliance
Ensure that all permits and licenses are in order and that occupational health and safety regulations are followed. Ensure that your subcontractors and suppliers also comply with their legal obligations. Non-compliance with regulations can result in penalties and joint liability.
Conflict resolution: prioritize out-of-court solutions
If a problem arises, always prioritize amicable solutions before going to court:
- Direct negotiation: The fastest and most economical route.
- Mediation: An impartial third party can help you reach a satisfactory agreement.
- Arbitration: More agile and specialized than ordinary courts.
Remember: good documentation will be your best ally if the conflict escalates.
Case Study: The Value of Planning Ahead
Imagine you hire a carpentry supplier, but the contract doesn’t define the quality standards. After installation, the doors are defective, and the supplier backs out. The result? A conflict you could have avoided with a more detailed contract and prior technical controls.
Conclusion: Prevention, Your Best Investment
Preventing litigation not only saves money and time, but also protects your company’s reputation and continuity. A preventative approach, based on solid contracts, constant controls, and effective communication, is the best way to focus on what really matters: growing your business.
Do you have questions about how to secure your contracts or manage relationships with subcontractors and suppliers?
At Cardador & Marín Abogados, we are with you every step of the way, offering preventive advice and customized solutions to ensure your next project is a success.
Contact us and build on a safe foundation. Your peace of mind and that of your company deserve it.