Legal Question in Construction Law in Florida

Re: Owner's deductions from contractor's progress payment

Because I do not know all of the facts, I can only offer you some general advice. It may be a good idea to consult with a lawyer. You have raised some legal issues that will require examination of your contract and the project schedule. Feel free to give me a call at (954) 229-1008.

In general, an Owner may be compensated for damages resulting from defective work. Most construction contracts will provide for the proper procedure to be followed prior to deducting money from progress payments. These procedures are often designed to give the responsible party adequate notice and opportunity to cure the problem. These procedures can sometimes be waived in emergencies to protect health, safety, property, etc. Based on your question, it appears that the issue involved a potential schedule delay. In order to have a delay, this defective work would have to be on the project schedule's critical path. Keep in mind that because the contractor is in charge of means and methods of construction, he has the right to accelerate and resequence work. If you step in without giving him an opportunity to fix the problem first, the contractor may be able to avoid liability.

In evaluating the assessment of liquidated damages, the project schedule will be crucial. There are generally three types of schedule delays:

1. Nonexcusable / Noncompensable: Occurs when the contractor is the only party responsible for the delay. The contractor may be liable for liquidated damages and cannot recover his own additional costs.

2. Excusable / Non compensable: Occurs when you have concurrent schedule delays, with the contractor and another party responsible. In general, the contractor may be entitled to an extension of time, but cannot recover additional costs.

3. Excusable / Compensable: Occurs when the contractor is not responsible for the delay. He may be entitled to damages and an extension of time.

If you have a computerized CPM schedule, be sure to audit the contractor's logic ties and schedule updates. If you need help, give me a call. I am proficient in Primavera Suretrak, P3 Project Planner and Microsoft Project. I'll be happy to speak with you at no charge. Good luck!