If you are a subcontractor and a problem arises during a project, it is frequently in your best interest to address the problem immediately. If you wait too long, you may lose your right to raise a dispute against the general contractor and will likely face additional hurdles and costs to resolve the contract dispute.
Subcontractors are often surprised to hear that, if they wait little more than a week to address a problem, they may have acted too late to preserve their legal rights. The often-used CCA-1 2021 Stipulated Price Subcontract published by the Canadian Construction Association contains several provisions that require subcontractors to give written notice to the general contractor promptly if a problem arises. For example:
- Delays – SCC 6.5.4 requires the subcontractor to give written notice within 7 working days from when the delay starts if the subcontractor requires an extension of time to complete their work.
- Increase to Subcontract Price – SCC 6.6.1 requires timely written notice to claim an increase in the subcontract price. Following receipt of the written notice, the contractor has 10 working days to reply. If the subcontractor disagrees with the contractor’s reply, under SCC 8.3.1, the subcontractor has only 7 working days to provide written notice to dispute.
- Disagreement with Contractor’s Decisions – If a subcontractor disagrees with a decision made by the contractor, depending on the particular circumstances, the subcontractor may have only 7 working days to notify the contractor in writing that the subcontractor disputes the decision under SCC 8.3.1.
- Preserving Breach of Contract / Negligence Claims – Finally, if a subcontractor has a claim for breach of contract or negligence that arose while the subcontract work was being completed, under SCC 13.2.1, the subcontractor must provide written notice to the contractor about that claim no later than 10 calendar days before the expiry of the builder lien period. If the subcontractor fails to provide this notice, the contractor may have a complete defense to the subcontractor’s claim.
Tips & Tricks for Contract Disputes
If you believe you may be heading into a disagreement with the general contractor, you should seek immediate and early legal advice. There is specific language we can recommend you use in your communications with the general contractor that will help you preserve your legal rights and even avoid a larger dispute or problem down the road. You will also want to think carefully about the steps you take to resolve a dispute mid-project. Depending on your situation you may want to:
- Re-think who you are talking to on site and see if there is another representative of the general contractor or owner you can speak with to defuse the situation;
- See if it makes sense to involve the consultant or another neutral party;
- Force the general contractor, under SCC 8.1.1, to issue in writing a formal decision about the matter at hand;
- Consider whether you should exercise any contractual entitlement to suspend the work; or
- If the situation warrants, exercise any contractual entitlement to terminate the contract.
Before taking any steps to suspend the work or terminate the contract, you need to carefully weigh the risks associated with simply walking off the job. Often times, there are less drastic steps you can take that will provide you with the outcome you need without risking a claim for breach of contract from the general contractor.
At Pihl Law Corporation, our team of litigators has experience with a wide assortment of construction disputes at all levels of dispute resolution. Contact us today for a consultation.
The information provided above is for educational purposes only. This information is not intended to replace the advice of a lawyer or address specific situations. Your personal situation should be discussed with a lawyer. If you have any questions or concerns, contact a legal professional.