Should your construction contract address legal fee recovery?

On Behalf of | Nov 30, 2022 | Construction Contracts |

Before you perform construction-related work for an individual or business in New Jersey, you want to have a carefully drafted construction contract in place. A construction contract serves several distinct purposes and helps outline responsibilities, reduce confusion and lower the chance of a construction dispute arising. Yet, if a construction dispute does arise, you may want to have a clause in your construction contract detailing if the losing party is responsible for paying the other party’s legal fees.

Per, there is a common misconception that the losing side in a construction dispute is always on the hook for the other side’s legal fees. This is not the case, though.

Recovering legal fees

If you wish to recover legal fees from the losing party in a construction dispute, there are typically two ways to do so. You either need to reference a statute that enables you to do so, or you need to have the fact that the losing party pays the other side’s legal fees outlined in your construction contract.

Including a contractual provision

If you decide to include a contractual provision in your construction contract that requires the losing party in a construction dispute to pay the other side, make sure the language contained therein is clear and not open to interpretation. It may also serve you well to outline exactly what makes one party the “winner” in a construction dispute.

While a short clause outlining these terms is preferable to not having a clause at all, the more clear and thorough yours is, the better the chances of it holding up in court.

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