Construction Law Terms You Should Know

by | Mar 15, 2021 | Uncategorized

Construction law involves a high-level of nuance as it is often built around complex contracts involving many different parties. If you or someone you know works in the construction space, it’s important to stay informed on the jargon of the industry. Doing so will allow you a better understanding of construction law itself, creating a more informed decision-making process and enabling you to make the best choices for yourself, your employees, and your company.

Construction Law Term #1: Standard Form Contract

A standard form contract is different from a regular contract in that one party sets the terms for the contract and the alternate party then has the choice to either “take it or leave it”, so to speak. This may seem unusual considering most contracts involve a negotiation process leading to a mutual benefit, but in the construction industry standard form contracts often work better.

Interested in learning more about this particular term? Check out this great article on SFCs.

Construction Law Term #2: Retention

Retention is a versatile word you may have seen in other settings, but in the context of construction law it refers to a set amount of money (usually around 10%) that is retained by the owner from the payment until the work is finished.

Retention fees are used to ensure a high-level quality of work—in situations without retention, there is a lot more risk involved. Should you pay everything up front and the job not be done to your liking, the process then becomes much more complex. Retention money works to prevent this from happening.

Construction Law Term #3: Over-Inspection

Over-inspection is a legal term involving a government inspector and the process of their inspection. The government does have the right to engage in the inspection process and to work to ensure everything is aligned with code and the contract… but they cannot demand a higher quality of work than what is dictated by the agreed-upon contract.

So, to summarize: an inspector obviously has the power to come into a job site and do their job by inspecting and ensuring everything is up to a certain level, but they can’t “over inspect”, which is to say they can’t demand more than that which has already been agreed upon.

Construction Law Term #4: Abandonment

Within the construction law context, abandonment can refer to one of two things. First, contract abandonment, which refers to a situation in which both parties have conducted themselves in a manner that voids the original contract, usually ending in both parties mutually agreeing to part ways.

Abandonment can also refer to a contractor failing to perform their duties in one of many ways—not on time, incomplete, etc—which is cause for disciplinary legal action on the behalf of the hiring party. To learn more about abandonment and the various steps taken in the aftermath, read this article.

These are only a few examples of a wide-variety of terms related to construction litigation. We know it can be an overwhelming area and our experienced team is here to help you navigate this. If you have a question about this article, a different term, or find yourself in a situation where you require legal counsel, please reach out to us! We would be more than happy to assist you.

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