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Looking at some common legal claims in construction litigation, P.4

We’ve been looking in recent posts at some of the potential legal claims that can come up in construction cases, particularly in cases where defects and failure to complete work are alleged. We already looked briefly at breach of contract and breach of warranty claims, as well as fraud and misrepresentation claims.

Another important type of claim that can arise in construction disputes is indemnity, which refers to one party’s obligation to compensate another party the latter’s losses. In construction cases, general contractors rely on subcontractors to complete contractually defined portions of the project, and subcontractors’ failure to properly do the job can cause financial loss for the general contractor. General contractors who end up on the hook with the property owner or another party because of these failures may have the ability to seek indemnification. 

Florida law does not allow general contractors to obtain indemnity against subcontractors in cases where defective materials are provided by the contractor under a contract requiring an architect to approve the materials, provided the architect was the property owner’s representative, the general contractor made statements and took actions that indicated that he or she made the architect his or her agent for purposes of selecting the materials, and the defects could have been discovered during the architect’s inspection of the materials. In addition, a general contractor may not seek indemnity against subcontractors for defective work when the general contractor had actual notice of the defects.

Indemnification is an issue that is typically dealt with in construction contracts, and this is a good issue for parties to address prior to moving forward with a project. Florida case law provides, though, that indemnification agreements are only valid and enforceable when they contain monetary limitations on indemnity which are reasonably related to the contract. A subcontractor who plays a minor role in a construction project, for instance, may not necessarily be held liable for indemnifying a general contractor for major losses which exceed the scope of the subcontractor’s role in the project and any benefit the subcontractor gained under the contract. The key with these limitations is reasonableness, which is a fact-specific determination.

In our previous posts, we have only touched upon some of the claims that can come up in construction litigation, without attempting to be exhaustive in any way. In any construction dispute, of course, it is critical to work with an experienced advocate to ensure that one has guidance navigating the legal issues and the legal process itself. 

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