With disputes in the construction industry often involving complex contracts, communication can be make-or-break.
The National Association of Surety Bond Producers (NASBP) recently featured an article by construction litigator Jason Strickland to break down a critical step. "'Reading the Riot Act'—Why Notice and Opportunity to Cure Matter" summarizes the Notice to Cure process while highlighting the importance of communication and potential consequences if proper steps aren't taken along the way. From the article:
In a typical construction contract, there are many hard remedies one party can impose on the other party if the other party is in breach of the contract, especially if the first party is higher up the contracting chain than the breaching party (use of "breaching party" herein implies the use of "allegedly" as a prefix). These include, without limitation:
- Terminating the other party's performance under the contract.
- Performing some or all of the other party's work under the contract and then backcharging them for the cost of doing so.
- Supplementing the other party's forces and backcharging them for the cost of doing so.
- Withholding money from payment to the other party, including potentially money otherwise owed on other, unrelated projects.
- Seizing materials, tools, and equipment of the other party.
Like the Riot Act, providing notice and an opportunity to cure is, at its most basic, both a mechanism intended to deescalate the intensity of the conflict between the parties and to provide the breaching party with an opportunity to correct their misbehavior and thereby avoid a harsh penalty—the harsh penalty being at the same time the outcome to be avoided and the threat to incentivize the breaching party to conform.
You can read the entire article right now on NASBP's blog.
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This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.
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