Whether you are Project Owner, a General Contractor or a Sub-Contractor, there are often times where a third party performs work or provides services or materials on your behalf for a project. If any issues with an entity or an individual that you hired to perform work are seen, it is very important that you carefully document these issues so you can protect yourself should a dispute develop in the future. Virtually every Construction Contract provides for remedies in the event of a default in performance by an individual or entity retained under the Contract. These offsets are called Back Charges. One of the most important things to remember about Back Charges is to ensure they are carefully documented by the owner or Contractor and that proper notice is given so disputes can be resolved at the close of a project rather than at a later time and through costly litigation.
Documenting Back Charges in Construction Projects
Posted in Business & Commercial Law
It would be foolish to assume that every project will be completed without any issues from Sub-Contractors or suppliers. Basically all projects experience issues with materials or services which were provided. In these circumstances, it is important that a party carefully document the Back Charges they are seeking against the party who is seeking payment. It is suggested that if you are a Contractor or a Project Owner that you develop a detailed form which you can utilize in virtually all projects with regard to Sub-Contractors or suppliers concerning defective materials or services. These forms should be completed at the time of the issue and presented in the form of notes, photos, and other documentary evidence. The better a party is able to document the Back Charges at that time, and thereafter, to provide appropriate notice to a party who seeks payment, the more likely it is that the dispute can be resolved without litigation. Obviously, if Back Charges are not properly documented and notice is not given until much later, it may increase the chance of litigation.
Should a party have questions as to how to properly document Back Charge or how to seek offsets in a lawsuit should they be sued by a Sub-Contractor or supplier, it is suggested that this party consult with an attorney. Although Back Charges are not necessarily invalid simply because they are not asserted until a later time, it can be difficult to reconstruct the past and provide the appropriate documentary proof if they are not memorialized at the time of the issue. Stark & Stark specializes in assisting Contractors, owners and other entities with how to properly document Back Charges and also how to defend against claims brought by parties that are seeking payment.
