Law firm Veat's subcontract agreement litigation, methods of winning through response strategies

Law firm Veat represented manufacturer A Co. (hereinafter “the client”) and achieved victory in a lawsuit related to a construction contract. This case involved a payment dispute due to the lack of a written construction contract, where the construction company, the plaintiff, sued the client for the remaining construction costs and delayed damages.

Construction began without a formal written contract, and a formal contract was subsequently drafted. During the construction process, a dispute arose between the client and the plaintiff regarding the method and timing of payments.

The plaintiff filed a lawsuit against the client, claiming the client had failed to pay the agreed-upon amount by the construction payment deadline, and sought construction costs and delayed damages while halting construction.

Law firm Veat thoroughly reviewed the key legal issues related to the construction contract in this lawsuit. It emphasized that when a construction contract is terminated before the contractor completes the work, the construction cost should be calculated based on the completed work, and the plaintiff failed to provide specific evidence to support its claim of more than a majority completion rate, despite claiming such a completion rate.

In particular, it emphasized the invalidity of the plaintiff’s claim that a separate agreement regarding maintenance of completed portions existed based on the circumstances of the contract execution.

The court accepted the evidence and logic submitted by Law firm Veat, rejected the plaintiff’s claim for construction costs in their entirety, and ordered the plaintiff to bear the litigation costs.

Importance of Contract Execution

A contract is not merely a formal document but an important legal instrument that clearly defines the rights and obligations of the parties in a legal dispute and can prepare for various situations that may arise.

Especially in construction contracts, disputes are likely to arise if detailed items such as the contract period, payment timing, calculation method for completed work, and late payment penalties are not clearly defined.

In other words, the contract should specifically state important contents such as the scope of work, payment terms and timing, and penalty clauses. If there is no specific provision in the contract stating whether the payment will be made in full after the completion of the work or partially based on the completed work, there is a risk of dispute.

In particular, the obligations and responsibilities between the parties should be clearly stated, and in the case of construction, detailed information on how to prove the progress of work and who is responsible for it should be recorded.

If a clear contract exists, legal disputes can be resolved quickly when they arise.

Law firm Veat assists clients by predicting legal issues that may arise at the contract drafting stage through legal advice on the drafting and review of construction contracts, preventing unnecessary legal disputes, and minimizing the risks clients may face.

If you need help with construction payment lawsuits or contract disputes, please contact Law firm Veat.

Thank you.

Sincerely,

Law firm Veat