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MEDIATION CLAUSES IN CONSTRUCTION CONTRACTS

Most construction contracts contain mediation clauses, or other dispute resolution clause, setting forth in advance the manner in which disagreements regarding the contract will be addressed. Maine’s Home Construction Contracts Act requires, at a minimum, a statement allowing the parties the option of adopting a method for resolving contract disputes without the time, cost, expense, and uncertainty that comes with litigation. Typically, the statement sets forth a choice between arbitration or mediation. Most standard form construction contracts also contain dispute resolution provisions. In construction cases, many disagreements do not focus on complex legal issues; rather, they involve such issues as workmanship, delay, cost, and strong differences of opinion and expectations. Especially in residential cases, the parties tend to be emotionally charged and frustrated. A well-trained mediator can be a productive neutral force between homeowners, who do not take lightly their investment in a significant asset (their home), and contractors, who do not appreciate their workmanship being called into question. Both parties tend to want to put the matter behind them; a properly run mediation session can drive them toward this common goal. Disputes between contractors and their suppliers or subs can also be detrimental in a business sense. In addition to the cost, delay, and bad feelings litigation can foster, important business relationships between the parties can be put at risk. Maine is a small state. A good mediator can help the parties mend fences so that they can continue to support each other in the close-knit Maine construction industry. When selecting a mediator to assist with your clients’ construction disputes, an attorney with a strong background in all...

CONSTRUCTION LAW IN MAINE

Construction Law in Maine:  Here are some legal issues affecting both owners and contractors involved with residential and commercial construction ventures. I.          CONTRACTS A.    Written Construction Contracts. Whether you are having work performed on your home or your business – or performing work on someone else’s home or business – it is important to have a written contract.  In some cases, a written contract is legally required, such as under Maine’s Home Construction Contracts Act, discussed below.  A written contract may not be required by law in certain commercial settings, or where the job is for less than $3,000.  Having a written contract is extremely important, however, in avoiding future disputes, which could otherwise come at the worst possible time – in the middle of an unfinished project.  All parties benefit from the process of negotiating and drafting a contract setting forth the mutual understandings and expectations.  The contract should set forth the specific terms of the project, the timeframe, the scope of the work involved, and the cost and payment obligations.  It should contain dispute resolution provisions, warranty and insurance information, and other project-specific clauses. B.    Insurance Policies.  For contractors and other construction professionals, it is a good idea to evaluate your insurance protection when entering into contracts for construction work.  Speak with your insurance agent about the scope of your coverage, generally, and any project-specific endorsements that might be required.  Be sure you understand your policy limits, exclusions, and deductibles.  Likewise, project owners will want to inquire about insurance coverage before hiring professionals to work on their property. II.        Maine Laws Protecting Consumers A.    Home Construction...