Lump Sum Contracts

Lump Sum Contracts for Construction Projects

   A construction contract is a legally binding agreement between two or more parties that includes the scope of a project, the pricing structure, and the time schedule to complete the work.  It details the terms and conditions by which each party shall abide from the start of a project to its completion. A traditional agreement for a construction project is a lump sum contract, which provides a global price to complete a project, instead of bidding on individual items. This all-inclusive pricing arrangement includes labor costs, material costs, subcontractor fees, and also covers a contractor’s overhead and profit margin.  It should have a provision for risk contingencies in the event of unforeseen circumstances that may impact on the cost of a project. A lump sum contract has multiple components and can be complicated.  It is best to have an experienced contract attorney to negotiate and draft the agreement. The Boutty Law Firm, P.A., handles construction law matters of all complexities, using strategies and concepts designed to minimize risks to our clients. We can negotiate and draft contracts or resolve disputes, representing any of the parties involved in the construction process.

 Pros and Cons of Lump Sum Contracts

There are advantages and disadvantages for a contractor or property owner to engage in a lump sum contract. For a contractor, there is a greater margin for profit, especially if the project is finished ahead of time and a built-in risk contingency is not utilized. A lump sum contract requires minimal accounting documentation for the property owner, which saves time and reduces overhead costs.  For a property owner, it is easier to obtain financing for a lump sum contract, as there is a high degree of certainty regarding the total cost of the project.  The property owner is not liable for excess expenditures, unless it is addressed in the initial contract or unless the property owner requests a change order. A lump sum contract is considered low risk for a property owner.

There are some disadvantages to having a lump sum contract, especially for a contractor, as there is a high risk for cost overruns, such as increased material costs that were not accounted for in the contract.  The contractor may see the need for a change order during the construction phase, and the owner may reject payment on the change order, causing the contractor to be liable for the cost.  For the property owner, there can be lien waiver issues. If the contractor withholds payment from a subcontractor, there can be a mechanic’s lien file against the property.

The Boutty Law Firm, P.A. Offers Insightful Representation

The Boutty Law Firm, P.A. works diligently to achieve favorable contract terms for their clients. We take into consideration project inflation costs, the economic impact of change orders, and allowances for unforeseen conditions that affect the progress of the project.   We represent clients in residential and commercial disputes and claims through negotiation, mediation, or litigation. Attorney Shane Boutty is well versed in the application of construction law, as he is a state certified contractor and has owned several construction companies. The Boutty Law Firm, P.A. is located in Winter Park, Florida and serves clients in Orange and Seminole Counties.  We can be contacted at 407-537-0543.  Call for an initial consultation to discuss your construction law matter.   

Contract Documentation

The Importance of Documentation Retention for Construction Projects

   There are many contracts drafted and signed for every major construction project and these documents can provide legal protection in the event of future disputes.  Construction projects generate a vast amount of paperwork and safeguarding these records can be a daunting task.  Implementing a document retention policy can shield a company from liability claims, as a contract, report, log, or record can provide supporting evidence for arbitration or litigation. Retention of documents is an essential practice for the success of a construction business.

 Common construction disputes include breach of contract claims including:

  • Non-compliance with payment, delays, scope of work disputes, defective work due to errors or omissions, and latent defects that can be discovered long after a project is completed. Workplace injuries and accidents, mechanic’s liens, property damage, negligent supervision, and copyright infringements are other types of claims.

    The length of time that construction records should be retained depends on the statute of limitations and the statute of repose. In the State of Florida, a lawsuit for construction defects must be filed within four years from the issuance of a certificate of occupancy or when the owner takes possession of the property.  The statute of repose, for latent defects, is ten years from the date that the owner takes possession. According to Florida and Federal recordkeeping requirements, payroll records are to be kept for a minimum of four years.  The Internal Revenue Service can audit your company as far back as six years, therefore it is recommended that tax records be kept for at least seven years.   

What Types of Documents Should Be Preserved?

   Be diligent about safeguarding your contracts and records, as documentation is the framework of a plaintiff or defendant’s legal dispute. The vast amount of paperwork for  major construction projects can include the initial contracts, insurance certificates, drawings and specs, design and engineering work, change orders, purchase orders, photographs of the construction process, bid documents, invoices, field reports, safety reports, payroll records, and business correspondence. The use of scanning for electronic storage may be a better option for document management than keeping manual records and it allows accessibility to the documents wherever they are needed. Another aspect of a business document retention policy is instituting detailed procedures that are used to destroy contracts and documentation that are no longer needed. However, intentionally destroying documents that are relevant to a pending litigation may suggest that the document contained information that is not favorable to your case.

The Boutty Law Firm, P.A. is a Multi-Service Business and Construction Law Firm

The Boutty Law Firm can provide counsel on all matters regarding construction and commercial law, from the bidding on a construction project to its completion.  We handle all levels of complexity for our clients, in both state and federal courts. Attorney Shane Boutty is a state certified contractor and his experience and knowledge is invaluable in minimizing risks and finding effective and affordable solutions for his clients.  We represent general contractors, subcontractors, developers, construction companies, homeowners, property owners, material suppliers, architects, and homeowner’s associations. Our law firm is adept at negotiations, arbitration, and court room litigation. Our goal is to protect your interests.  We are located in Winter Park and serve clients in Orange, Seminole, and Volusia counties in Central Florida. Call our office at 407-537-0543 for legal advice and quality representation.

Force majeure contract clause

Protect against Liability for Unforeseen Contract Delays with a Force Majeure Clause

   The language in a business contract is of paramount importance to a contractor’s profitability and success.  The current coronavirus pandemic has the potential to cause significant delays in construction projects and other economic factors, affecting productivity and completion. There may be a question of a contractor’s culpability and damages even though the current events are major unforeseeable circumstances, subsequently causing the noncompliance of contractual obligations.  Limited travel, large gathering restrictions, quarantine regulations, material shortages due to supply chain problems, and delays are just some of the reasons for the construction industry to be experiencing contractual difficulties and potential legal disputes at this time.

  Construction contracts are legally binding agreements between two parties that formalizes all the terms and conditions of a project, including construction start and end dates, labor costs, materials, and many other items.  A force majeur is a contract liability clause that is designed to address non-performance such as delays or economic damages due to extraordinary and unforeseen events.  It is a proactive measure to have a clearly written force majeur clause in every contract, to protect a construction company from a lawsuit that could result in financial disaster.

A force majeure is applicable for dire circumstances such as:

  • Severe disruptions in nature such as floods, fires, earthquakes, hurricanes, or shortages of energy supplies.
  • Acts of the government such as changes in laws and regulations that prohibit the work from being completed.
  • Labor issues such as strikes and protests.
  • War, terrorism, or epidemics.

   There are specific requirements that must be met to successfully invoke a force majeur clause.  The event must be beyond the control of the contractor and have a causal link to the performance non-compliance.  The party that invokes the clause must have evidence that they acted to mitigate the damages, perhaps through searching for other suppliers or other avenues to complete the project.  The content of a force majeur in a contract must include the type of event that is covered under the clause. It should include notification procedures and update obligations during an event, for all parties. There should be a provision for the delay or termination rights of both parties following the event.

The Boutty Law Firm, P.A. can Provide Legal Counsel for all Construction Needs

   The current coronavirus pandemic is gripping the construction industry and there is no indication as to its long-term impact on the economy. The Boutty Law Firm, P.A., is a multi-service law office that can review, revise, or draft your contracts with the protection of a well written force majeur clause. In the event of a contract dispute, The Boutty Law Firm, P.A. is an experienced construction law office that can protect your interests through negotiations, alternative dispute resolution, or court room litigation in the State of Florida. During these unprecedented times, we will work diligently to find solutions to your legal challenges. Our law firm serves Central Florida and all the surrounding communities. Call our office for an initial consultation at 407-537-0543.

New Business Owner

Legal Considerations in the Start up or Expansion of a Business Venture

   The launching of a business venture is both exhilarating and overwhelming.  An entrepreneur or a seasoned business owner that wishes to expand their services must investigate and decide on many significant issues.  Some of these are conducting market research, the planning of finances to determine viability and profitability, hiring a team, choosing a location, building a brand, and creating a marketing strategy. However, the most important aspect in building a successful business is the preparation of legal documents that will ensure a solid structure and protect your future assets.  The attorneys at The Boutty Law Firm, P.A. assist individuals and businesses with all the legal aspects of business start up and expansion.  They are experienced and knowledgeable in business law and can handle a variety of legal issues.Legal documents are the backboneof a business and can be the difference between success and failure.

 Important Business Formation Documents include;

  1. A Formal Business Structure is selected based on the needs of the business and will impact on the entity’s taxes, record keeping, and liability. Examples of business structures are sole proprietorships, partnerships, corporations, limited liability companies, and 501c3’s for charitable organizations. These governing documents require bylaws and operating agreements that define the rights and responsibilities of the corporate officers, directors, shareholders, and employees.  It is essential to have an exit strategy written into your business plan to eliminate stress and provide guidance if unexpected events occur that warrants the sale or closing of the business.
  2. Intellectual Property Assignment Agreements are important to have in every employee contract, especially in creative or technology fields, stipulating that the company owns the work product of the employees.   This document protects the company from the pirating of work or inventions by others, without expressed permission.  A copyright, trademark, or patent is needed to secure the ownership of ideas, products and services. 
  3. A Non-Compete Agreement, also called a restrictive covenant, is a contract that prohibits ex-employees from working within a geographical area for a competitor, for a period of time after leaving the company. This protects the company from an ex-employee transferring his client list to a competitor or providing a competitor with the knowledge and practices of your company.
  4. Non-Disclosure Agreements are confidentiality contracts and should be signed by any person that has access to confidential or proprietary information about your company, such as employee information, investor lists, trade secrets, marketing plans, and others.
  5. Employment Contracts create the foundation for a formal relationship and clarifies the rights, responsibilities, and obligations of employees and employers.  Documenting the terms of employment can be a great asset in dealing with any future disputes that may arise.

   The Boutty Law Firm, P.A. believes in being proactive to prevent legal problems before they arise.  W can review and draft documents for any aspect of business formation or expansion and assist with licensing, permits, zoning, and insurance issues.  We are experienced negotiators and litigators and can provide quality representation for disputes of breach of contract or commercial liability. Call our Winter Park, Florida office at 407-537-0543.  We serve all of Central Florida and the surrounding areas.

Housing Market Projections

Housing Market Forecasts for 2020

   Happy New Year!  While many are trying to adhere to their New Year’s resolutions, such as dieting, exercise, maybe finding a new job or a new relationship, real estate investors are on an emotional rollercoaster about the prospective housing market for this year.   Expert predictions of real estate trends for Florida in 2020 are variable, at best, with some market predictions for the Sunshine state being positive and others projecting a doom and gloom forecast. 

   Over the past decade, the housing market across the United States was strong, with the number of investors and buyers often exceeding the availability of inventory.  This was a consequence of a thriving economy, with low unemployment rates, low interest rates and various other economic factors.  Potential buyers and sellers were able to fulfill their dreams.  Although real estate forecasts can differ from state to state, the Florida Realtor Association recently reported that housing sales were up, almost by 15% in November of 2019 and the housing inventory was low.  While this appears to be good news for the housing market in 2020, there are inconsistencies in the economists’ predictions for the year ahead. According to a study done by the 2018 Q2 Zillow Home Price Expectations Survey, a study which included the polling of one hundred real estate experts and economists, they believed we will be entering into a housing recession beginning this year.  However, as 2019 progressed, Zillow recanted that position, advising that there will most likely not be a recession in 2020, as the economy has shown signs of growth and there is healthy consumer confidence.  In a survey that was conducted in August, 2019, of more than 200 economists, by the National Association for Business Economics, 72% believe there will be a recession, beginning in 2020. They cited trade policy, stock market volatility and rising interest rates as likely reasons for the next recession. In spite of the negativity of some real estate predictions, many believe that it is likely that the Florida real estate market will continue to flourish and it is a favorable environment for a lucrative investment.  Florida is the fastest growing state in the country, with Central Florida having the fastest growing cities in the United States.  There continues to be a high influx of northerners, immigrants from other countries and tourism driving the economy.

   While the real estate market is cyclical, with periods of high and lows, one thing is certain; every real estate transaction, whether buying, selling or leasing residential or commercial property, is best handled by a knowledgeable real estate attorney. The services of an attorney can safeguard your rights and ensure that you negotiate and close the deal, while protecting your interests and assets.  Whether you are a business owner, a real estate investor, an inheritance beneficiary, or an individual buying or selling your home, the Boutty Law Firm is experienced and effective in real estate and business law transactions.  Start the New Year off right, by calling for a consultation to discuss your real estate goals with a trusted attorney.   

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