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overpaid Contractor

Hello We signed a construction contract with a builder where we make payments on a turnkey project. The payments are now more than 50% of the contract sum but the actual work is about 30% done. Since we would like to exit the contract on the basis that the builder had done little on our premisses but keep on demanding advance payments. The builder decided to send us unreasonable additional costs. How to deal reasonable negotiate with him and how to get back our balance?

20 replies

Aug 30, 2019

A good first step when dealing with a contractor who's gone rogue is to look at the terms of the contract, itself. The contract should contain provisions on how and why the contract can be terminated, as well as terms regarding how payments should be made. If there's no written contract, or if the contract is silent as to how termination should be made, it's still important to tread carefully. Threatening to terminate a contractor might be a helpful negotiation tactic, but it also might just make things worse and make the situation that much more adversarial. Informing them that you're prepared to take legal action if necessary might whip them into shape as well - and if the threat for legal action is credible, generally construction businesses will take that prospect pretty seriously. Yet another option might be to threaten a potential complaint to the state's licensing board. For a licensed contractor, they'll want to avoid the attention of the state contracting board and potential for penalties. And, if they're unlicensed, they'd really want to avoid that attention. So, if necessary, threatening (or actually even pursuing) a complaint could be helpful. More on that here: Washington State Department of Labor & Industries. Negotiation is different for every circumstance, though. So it's hard to prescribe any blanket course of action. If possible, steering the dispute to alternative dispute resolution (like mediation or arbitration) might be helpful, though, if it looks like the dispute has the potential for snowballing out of control and into legal dispute territory. Termination Since you'd mentioned you'd wanted to terminate the contractor, let's explore that idea a bit. If a contractor must be terminated, it's important to do things by the book. So, if the contract provides a method for termination, that method should be followed. Even if there's little guidance there, termination should generally be made in writing, and it should clearly set out factual the reasons for the termination (leaving as much opinion and emotion out of the reasoning as possible). Before doing that, though, it might be wise to get a second opinion by bringing in another contractor or project manager to assess the progress of the contract and to advise on how the job is coming along. If, in their professional opinion, the job has fallen behind - then that would serve as more evidence that the contractor should be terminated. Ultimately, though, determining whether and how to terminate a contractor is a tough decision. Consulting an industry professional or a local attorney might help determine whether that's the right decision for you. Finally, here are some other resources I think might help: (1) Wrongful Termination | When is Termination Considered Wrongful? (2) How a Termination Clause Works in a Construction Contract

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