When Do Contractors Really Need An Attorney?
Tuesday May 29, 2012
We live in a subcontracting world. These days, most everyone is specializing. This means that general contracting companies need to be especially vigilant when it comes to legal agreements with third-party subcontractors. An article on The Builders Counsel Blog points to one example that reiterates the importance of getting legal guidance when you need it.
A contractor in Florida neglected to carefully read two clauses — one in his prime contract that required him to pay his subcontractors before he received payment from his client, and one in his contract with his subcontractor, which was a “pay if paid” clause. In this case, the court ruled in favor of the subcontractor, as the ambiguity was caused by the legal agreement provided by the general contractor.
Many contractors opt to use such contract templates because it expedites the process and provides them legal protection. They’re a great tool, but they don’t necessarily work for every project, as in this case.
“Failing to read the contract as a whole and apply each of its terms across each incorporated document can be a nightmare,” the article said. “This is a classic depiction of ambiguity, perhaps the most common contractual failure.”
When hiring a subcontractor, there are terms and conditions, multiple parties and contractual flowdowns that you need to understand. While contractors won’t always need an attorney, this article highlights the importance of sitting down with an attorney when you need one. The author suggests having your attorney review your prime contracts to make sure they match with vendor agreements.
Source: The Builders Counsel Blog, May 2012