{"id":2153,"date":"2017-07-20T10:08:24","date_gmt":"2017-07-20T14:08:24","guid":{"rendered":"https:\/\/www.sage.com\/en-us\/blog\/?p=2153"},"modified":"2026-02-12T05:41:12","modified_gmt":"2026-02-12T10:41:12","slug":"construction-contracts-claims-need-know","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-us\/blog\/construction-contracts-claims-need-know\/","title":{"rendered":"Construction contracts and claims: What you need to know"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-us\/blog\/category\/strategy-legal-operations\/\" class=\"entry-header__link\">Strategy, Legal &amp; Operations<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tConstruction contracts and claims: What you need to know\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2017-07-20T10:08:24-04:00\">July 20, 2017<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"Construction contracts and claims: What you need to know\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-us\/blog\/construction-contracts-claims-need-know\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-us\/blog\/author\/patrickbarthet\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2017\/05\/Patrick_Team_Square-350x350.jpg\" class=\"entry-author__image\" alt=\"\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2017\/05\/Patrick_Team_Square-350x350.jpg 350w, https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2017\/05\/Patrick_Team_Square.jpg 750w\" sizes=\"auto, (max-width: 40px) 100vw, 40px\" \/>\t\t\t\t<span class=\"entry-author__name\">Patrick Barthet<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p>Construction jobs are prone to issues and disputes. Schedule delays, changes, and other conflicts can result in a legal claim. Typically, a claim comes down to money and the ability to recover additional expenses or financial losses. Claims can also be made for time extensions. Your contract should define what is considered a claim and how to handle a claim when the situation arises.<\/p>\n\n\n\n<p><strong>Limiting liability for general contractors<\/strong><\/p>\n\n\n\n<p>With respect to claims, a general contractor who drafts a subcontract needs to remember two things to streamline the claims process:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Identify a time period in which all claims must be submitted.<\/li>\n\n\n\n<li>Limit liability to what can be recovered from the owner.<\/li>\n<\/ol>\n\n\n\n<p>The following sample provision accomplishes both of these goals:<\/p>\n\n\n\n<p><em>Any and all claims for additional compensation or subcontract time which subcontractor has against contractor shall be made in writing no later than seventy-two (72) hours from the first event giving rise to the claim. Any and all claims submitted thereafter shall be deemed waived. Subcontractor recognizes that any and all timely submitted claims shall be submitted to the owner and that subcontractor\u2019s right to recover on any such claims is expressly contingent upon contractor receiving payment and\/or a time extension from owner. Contractor shall have discharged its obligation to subcontractor with respect to the claim when contractor has paid and\/or given to subcontractor its pro rata share of any recovery contractor may have received from owner for such claim.<\/em><\/p>\n\n\n\n<p><strong>Protecting subcontractors<\/strong><\/p>\n\n\n\n<p>If you are a subcontractor, however, the above provision provides little comfort. Basically, you are putting your claim into the hands of the GC to negotiate. Nowhere in the provision does it say the GC will do its best to negotiate and resolve the claim quickly. Consequently, as a subcontractor, you\u2019ll want to add something like the following to your contract:<\/p>\n\n\n\n<p><em>Contractor shall address any pending subcontractor claim before requiring subcontractor to proceed with work on any new, subsequent claim.<\/em><\/p>\n\n\n\n<p>This statement protects you from a situation where you have several unresolved claims but are still required to keep working, paying your labor, and providing materials. That can get very expensive. Adding a pending subcontractor claim provision will slow down the pace of work until the issues important to you get resolved. It also gives you leverage to get claims addressed faster.<\/p>\n\n\n\n<p><strong>Exaggerated and false claims<\/strong><\/p>\n\n\n\n<p>Violations of the False Claims Act can have serious legal repercussions for contractors. Make sure you have a strong <a href=\"https:\/\/www.thelienzone.com\/5-steps-to-avoid-false-claim-violations\/\">compliance and review program<\/a> in place to assure all claims you make are accurate and legitimate. Carefully document all claims, conduct internal compliance audits, and correct any violations immediately. These actions will also help defend against any false claim allegations.<\/p>\n\n\n\n<p>As with anything involving contracts, understanding the laws and provisions related to claims will reduce your risks and protect your rights.<\/p>\n\n\n\n<p>&nbsp;<\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to our Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get our latest business advice delivered directly to your inbox.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-ab515c6e-7e90-4c2f-a67e-113872516e8b\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg\" class=\"single-cta__image\" alt=\"Working from home with tea in hand\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Construction jobs are prone to issues and disputes. Schedule delays, changes, and other conflicts can result in a legal claim. Typically, a claim comes down to money and the ability to recover additional expenses or financial losses. Claims can also be made for time extensions. Your contract should define what is considered a claim and [&hellip;]<\/p>\n","protected":false},"author":113,"featured_media":1373,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[44],"tags":[192],"business_type":[40],"lilypad":[],"context":[],"industry":[50],"persona":[],"imagine_tag":[246],"coauthors":[659],"class_list":["post-2153","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-strategy-legal-operations","tag-construction","business_type-small-business","industry-construction-and-real-estate"],"sage_meta":{"region":"en-us","author_name":"Patrick Barthet","featured_image":"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2017\/05\/CRE_iStock-507693178.jpg","imagine_tags":{"246":"Construction"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice US","distributor_original_site_url":"https:\/\/www.sage.com\/en-us\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/2153","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/users\/113"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/comments?post=2153"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/2153\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media\/1373"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media?parent=2153"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/categories?post=2153"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/tags?post=2153"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/business_type?post=2153"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/lilypad?post=2153"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/context?post=2153"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/industry?post=2153"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/persona?post=2153"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/imagine_tag?post=2153"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/coauthors?post=2153"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}