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Looking at some common legal claims in construction litigation, P.3

Picking up where we left off last time, there is another set of claims that can arise in construction litigation is misrepresentation and fraud. Fraud, of course, implies that the party who committed it did so with intent, whereas misrepresentation may occur when a party to a construction project negligently fails to convey accurate information.

There are various ways fraud and misrepresentation claims may arise in construction projects. Examples include: general contractors relying on a time frame specified by a subcontractor to complete a portion of the project; general contractors relying on the bids of subcontractors to reach their own bidding price; and subcontractors relying on information provided by the general contractor when assessing the practicability of the job, bidding, and specifying time frames for its completion. 

In some construction disputes, fraud or misrepresentation is used as a defense to a breach of contract claim, such as when a subcontractor fails to complete his or her portion of the project because the general contractor misrepresented the nature of the job or the time it would take to complete the job. In cases where a party makes false promises or negligently misrepresents material facts in order to secure a bid, provide assurance of completion of the work, or to accomplish some other goal with respect to the project, that party can be held liable for fraud or misrepresentation in court.

Even when a party to a construction project does not have fraudulent intent or did not act negligently in misrepresenting information to other parties, it may be possible to enforce those promises in court. To enforce such promises, it has to be proven that the party who made the promise knew that it would induce reliance by the other party, the other party relies upon the promise to his or her own detriment, and the only way to avoid an unjust outcome is to enforce the promise.

In our next and final post in this series, we’ll look briefly at indemnity claims in construction litigation

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