The construction industry is one of the most complex when it comes to legal agreements. With multiple parties involved—including property owners, contractors, subcontractors, suppliers, and architects—there are many opportunities for confusion and disputes to arise. A well-drafted contract can help prevent misunderstandings, but even the most detailed agreements can still lead to unforeseen conflicts.

At RTRLAW, we specialize in handling construction contract disputes and protecting our clients from financial losses, project delays, and litigation risks. It’s important to understand the major causes of legal disputes in construction contracts and how businesses and contractors can mitigate these risks.

1. Breach of Contract

One of the most common causes of disputes in construction contracts is breach of contract, which occurs when one party fails to fulfill its contractual obligations. Causes of a breach of contract can include:

  • Failure to complete the project on time
  • Not meeting quality standards
  • Non-payment for services rendered
  • Violating terms related to materials, labor, or safety regulations

A clear, well-defined contract that outlines deadlines, quality requirements, and dispute resolution procedures can help to prevent these issues. If a breach occurs, parties may seek legal remedies such as contract termination, financial damages, or legal enforcement of the agreement.

2. Payment Disputes

Payment issues are a frequent source of construction litigation, in particular when:

  • A contractor or subcontractor does not receive payment for work completed
  • An owner refuses to pay due to alleged defects or delays
  • Invoices are disputed due to scope changes or unclear billing practices

To avoid payment disputes, all contracts should include:

  • Clear payment terms and schedules
  • Conditions for withholding payments
  • Guidelines for change orders and cost adjustments
  • Procedures for resolving financial disagreements

If conflicts about payment arise, parties may need mediation, arbitration, or litigation to resolve the issue.

3. Project Delays and Timeline Disputes

Construction delays are often inevitable, but when they are excessive or result in financial losses, they can lead to serious disputes. Common causes of delays include:

  • Weather conditions disrupting progress
  • Material shortages or supply chain issues
  • Labor strikes or shortages
  • Unforeseen site conditions, such as underground utilities or environmental concerns
  • Poor project management or inefficient scheduling

Contracts should clearly define the project timelines, any extension conditions, and potential penalties for delays. Liquidated damages clauses can also help compensate parties for financial losses due to prolonged delays.

4. Design Defects & Construction Deficiencies

Disputes often arise when a project does not meet the agreed-upon design specifications or construction standards. Defects can be classified as:

  • Design Errors: Issues arising from architectural or engineering mistakes
  • Material Defects: Use of substandard or defective materials
  • Workmanship Deficiencies: Poor construction practices leading to structural failures or safety hazards

To minimize the risk of construction defects, contracts should specify the quality standards, compliance requirements, and warranty provisions. When disputes occur, expert testimony from engineers or building inspectors may be needed to determine liability.

5. Change Orders & Scope of Work Disputes

Change orders occur when modifications are made to the original project scope. This can include but is not limited to:

  • Additional work requested by the owner
  • Design alterations required due to unforeseen site conditions
  • Material substitutions or modifications

Disputes can arise if:

  • The contractor proceeds with extra work without written approval
  • The owner refuses to pay for additional approved work performed
  • Changes result in budget overruns or timeline extensions

To prevent scope disputes, contracts should clearly define the process for requesting, approving, and pricing change orders.

6. Licensing & Permit Violations

Construction projects must comply with state and local building codes, zoning laws, and safety regulations. Legal disputes can occur when:

  • A contractor operates without the necessary licenses
  • The project lacks proper permits or inspections
  • Building code violations result in fines, stop-work orders, or legal action

Ensuring compliance with all regulatory requirements before beginning a project can help avoid costly penalties and legal disputes.

7. Termination of Contracts

Contract terminations can lead to even more complex legal disputes, particularly when:

  • An owner terminates a contractor for unsatisfactory performance
  • A contractor walks off a job due to non-payment
  • Either party claims wrongful termination or demands damages
  • To reduce the risk of termination disputes, contracts should include:
  • Termination clauses outlining conditions for ending the contract
  • Dispute resolution methods such as mediation or arbitration
  • Compensation terms for incomplete work or outstanding payments

8. Liability for Injuries & Property Damage

Construction sites pose inherent risks for workers, visitors, and surrounding properties. Legal disputes may arise if:

  • A worker is injured due to unsafe conditions
  • A pedestrian is hurt near the construction site
  • Construction work causes damage to adjacent properties

Contracts should always include liability waivers, insurance requirements, and indemnification clauses to protect parties from legal claims related to worksite injuries or damages.

How Can You Protect Yourself from Construction Contract Disputes?

To avoid legal conflicts in construction projects, contractors, developers, and property owners should:

  • Work with an experienced contract attorney to draft and review agreements
  • Ensure all contract terms are clear and detailed, including payment terms, project scope, and dispute resolution methods
  • Keep accurate records of work performed, change orders, and communications
  • Follow all licensing, permitting, and safety requirements
  • Seek legal counsel immediately if a dispute arises

How Can RTRLAW Help with Construction Contract Disputes?

If you are facing a legal dispute related to a construction contract, RTRLAW’s experienced litigation attorneys are here to help. We assist contractors, developers, property owners, and subcontractors in resolving conflicts through negotiation, mediation, arbitration, and litigation.

Whether you need assistance in drafting contracts, enforcing agreements, or defending against claims, our legal team will protect your rights and work toward the best possible outcome.

Contact RTRLAW today for an initial safe and secure consultation at 1-833-HIRE-RTR to learn how we can assist with your construction contract dispute. Let our experienced attorneys guide you through the legal process and help you resolve disputes efficiently.