If you own a construction business, you probably already know the value subcontractors can bring.
These professionals often have specialized skills and knowledge that your current team might not have. Furthermore, they allow you to scale your workforce up or down based on project needs.
However, hiring subcontractors can also come with certain risks, and that includes the failure to deliver.
If your subcontractor does a subpar job or fails to finish the work entirely, your business could be on the hook for additional expenses, an unsatisfied client and a damaged reputation. Luckily, there are several ways to address this problem.
Review the contract
The first step is to review your subcontract agreement. This involves examining specific clauses related to default, delays and remedies.
Also, look for provisions on cure periods. These allow the subcontractor time to correct the issue, as well as termination rights that may allow you to end the contract under certain conditions.
Understanding the details of your contract will guide your next actions and make sure you are operating within your legal rights.
Document the issue
Create a detailed timeline of events leading to the failure, including:
- Dates of missed deadlines
- Quality issues
- Construction defects
- Other breaches of contract
Collect all relevant emails, meeting minutes, progress reports and other documentation that shows the subcontractor’s shortcomings. This information will be vital if the situation escalates to dispute resolution or legal action.
Communicate formally
Most contractors will issue a written notice of default that clearly outlines the specific breaches of contract. In this notice, you may include relevant clauses to support your position and clear expectations for the subcontractor to remedy the situation.
This formal communication will serve as an official record of the issue and your attempt to resolve it.
Withhold payment
If your subcontract agreement allows it, consider withholding payments for incomplete or unsatisfactory work. Check the payment terms in the contract to ensure you comply with your obligations.
Terminate the contract
Suppose the subcontractor still fails to deliver despite the time you gave them. In that case, you may need to consider terminating the subcontract for default.
Keep in mind that you might need to provide a written notice of termination, citing specific breaches and relevant contract clauses.
Take legal action
Taking legal action is often a last resort when other attempts have failed. This process usually begins with filing a lawsuit for breach of contract against the subcontractor. Before doing so, it’s crucial to consult a construction law attorney who can evaluate your case.
Filing a lawsuit can help you recover damages for the subcontractor’s failure, which might include expenses for hiring replacements and additional materials.
