Tag Archives: Missouri Construction Law

7 Important Tips Roofing Contractors Should Know Before Performing Work in Missouri

The purpose of this article is to provide roofing contractors a general overview of some common compliance issues that roofers experience when conducting business in the state of Missouri. In hopes that businesses and contractors will have better statutory compliance in the future and to reduce customer complaints and unscrupulous business practices, we have prepared a general rundown of some caveats and tips that contractors should be aware of when carrying out roofing work in Missouri.

1.     Do not offer to pay any part of the customer’s deductible or provide a discount or rebate as part of the roof sale

Although you could sell the job a lot easier if the customer had no out-of-pocket expenses, Missouri law prohibits contractors from offering to pay the insurance deductible or otherwise creatively working around the statute.

The specific statute set forth under section 407.725.6, R.S.Mo., states:

“A contractor shall not advertise or promise to pay or rebate all or any portion of any insurance deductible as an inducement to the sale of goods or services.  As used in this section, a promise to pay or rebate includes granting any allowance or offering any discount against the fees to be charged or paying the insured or any person directly or indirectly associated with the property any form of compensation, gift, prize, bonus, coupon, credit, referral fee, or other item of monetary value for any reason.” R.S.Mo. § 407.725.2 (2014); https://revisor.mo.gov/main/OneSection.aspx?section=407.725

As you can imagine, unscrupulous contractors regularly attempt to employ this tactic on unwary customers. Replacing a roof is a lot more appealing for the customer when the customer has no expenses. However, the Missouri legislature found that the negative impact on society outweighs the benefit and have prohibited such conduct. Accordingly, roofing contractors should not utilize such techniques or make any of the above-mentioned offerings to induce the customer into entering into the contract.

If you have questions regarding advertising or the legality of other sales techniques, please do not hesitate to contact us.

2.     Do not offer to negotiate insurance claims for customers

While it may seem natural to speak to the insurance company on behalf of the customer, such conduct is prohibited in Missouri.

The statutory section, 407.725.6, R.S.Mo., which bars such conduct, states the following, in relevant part:
“A contractor shall not represent or negotiate, or offer or advertise to represent or negotiate, on behalf of an owner or possessor of real estate on any insurance claim in connection with the repair or replacement of roof systems, or the performance of any other exterior repair, replacement, construction, or reconstruction work.” R.S.Mo. § 407.725.6 (2014); https://revisor.mo.gov/main/OneSection.aspx?section=407.725.

The consequence of representing or negotiating on a customer’s behalf will likely constitute a violation of the Missouri Merchandising Practices Act and could evoke a response from the Missouri Attorney General or could potentially lead to punishment for the unauthorized practice of law.

If the customer has a valid insurance claim due to hail or storm damage or some other covered claim, you should make your observations and analysis and refer the homeowner to competent legal counsel to assist with obtaining coverage from the insurance company. Do not risk the potential consequences that can result from violations of the Missouri Merchandising Practices Act. The risk is not worth the reward. If you have questions regarding your statutory duties or questions about insurance contract negotiations.

3.     Include Statutory Lien Notice in your Contract

Although many contractors do not know how mechanic’s liens work, they do know that mechanic’s liens can be an effective tool to collect payment on an outstanding balance from owners or other contractors. Depending on the situation, mechanic’s liens can be instrumental in getting you paid. Thus, it is critical to ensure that you preserve the right to file a mechanic’s lien on your project. Missouri mechanic’s liens can be trick and have a few rigid statutory requirements.

One of the most important requirements of filing a mechanic’s lien is providing proper notice. Missouri requires general contractors to provide notice to owner as a prerequisite or a condition precedent to filing a mechanic’s lien. Specifically, the applicable portion of section 429.012, R.S.MO., states the following:

Every original contractor, who shall do or perform any work or labor upon, or furnish any material, fixtures, engine, boiler or machinery for any building, erection or improvements upon land, or for repairing the same, under or by virtue of any contract…shall provide to the person with whom the contract is made or to the owner if there is no contract, prior to receiving payment in any form of any kind from such person, (a) either at the time of the execution of the contract, (b) when the materials are delivered, (c) when the work is commenced, or (d) delivered with first invoice, a written notice which shall include the following disclosure language in ten-point bold type:

NOTICE TO OWNER

FAILURE OF THIS CONTRACTOR TO PAY THOSE PERSONS SUPPLYING MATERIAL OR SERVICES TO COMPLETE THIS CONTRACT CAN RESULT IN THE FILING OF A MECHANIC’S LIEN ON THE PROPERTY WHICH IS THE SUBJECT OF THIS CONTRACT PURSUANT TO CHAPTER 429, RSMO. TO AVOID THIS RESULT YOU MAY ASK THIS CONTRACTOR FOR “LIEN WAIVERS” FROM ALL PERSONS SUPPLYING MATERIAL OR SERVICES FOR THE WORK DESCRIBED IN THIS CONTRACT. FAILURE TO SECURE LIEN WAIVERS MAY RESULT IN YOUR PAYING FOR LABOR AND MATERIAL TWICE.

Any contractors who collect payment of any type on a construction project without first having provided the above-cited notice will have waived their right to file a mechanic’s lien. This does not preclude you from pursuing the owner or contractor under breach of contract or quantum meruit claims. However, it is well-advised to preserve all of your rights, so you have these respective collection tools at your disposal in case you need them. Accordingly, this notice to owner must be provided by any general contractor on the project that wants to later assert mechanic’s lien rights against the property upon which the work was performed.

4.     Include a provision in your contract that allows for the recovery of attorney’s fees

In Missouri, parties to a lawsuit can typically only recover attorney’s fees if there is some statutory or contractual basis providing for the recovery of the same. Alternatively, if there is an incredibly unique situation where equities have to be be balanced or if litigation occurs as the result of a wrong committed by a third-party, courts may allow the recovery of attorney’s fees. “Generally, awards of attorney’s fees are permitted “only when called for by a contract; when provided by statute; when incurred as an item of damages because of involvement in collateral litigation; or ‘when a court of equity finds it necessary to adjudge them in order to balance benefits.’” Boone Valley Farm, Inc. v. Historic Daniel Boone Home, Inc., 941 S.W.2d 720 (Mo. App. 1997).

Nearly every roofing contractor that calls seeking counsel asks whether they can recover attorney’s fees. Many of those contractors find that they do not have any basis for recovering attorney’s fees.

This is an easy fix, however, but it has to be implemented before the project by including the provision into the contract. A contract that includes an attorney’s fees provision gives the contractor significantly more leverage when pursuing their claim.

Obviously, the factual situation must also be evaluated because there may be some statutory basis to recover attorney’s fees despite not having the desired contractual language.  However, generally speaking, there is typically no recovery of attorney’s fees on residential projects, unless the attorney’s fees provision is in the contract, whereas there may be a right to recover attorney’s fees on a commercial project by way of the Missouri Prompt Payment Act.

For purposes of this article, we will not discuss the Missouri Prompt Payment Act. However, you should take heed to the warnings contained in this article, avoid the potential loss of leverage if the case goes to court, and protect yourself by including an attorney’s fees/costs/expenses provision in your contract. That goes for contracts with homeowners as well as those with subcontractors.

If you have questions about drafting up an attorney’s fees provision or other contractual provisions, please contact us.

5.     Include a provision that allows for the collection of interest on outstanding balances

When someone refuses to pay you, it is frustrating feeling. Not only do you want to recover the balance, but you also want to tack on an extra $100 per day or charge them anything and everything you can. The only way to get equitable recourse during the pursuit of an outstanding debt is to have the debt accruing interest. Another tool to increase the pressure is the inclusion of a liquidated damages provision. Liquidated damages are discussed at length in another article on this website, but the focus of this article is to express the importance of including an interest provision in all roofing contracts.

The industry rate that we typically see is 1.5% per month or 18% per annum interest rate on outstanding balances. That means that if you are owed $10,000 for a year, you would be entitled to collect $1,800 per year in interest in addition to the $10,000 principal amount owed. This is critical especially when many lawsuits can be stretched out over the course of a one to several years. The interest provision creates leverage against the debtor to pressure them into paying the amount that is rightfully due. Alternatively, if the case goes to trial and you prevail, the debtor will have to pay the principal and the 18% interest on that principal.

If you need help collecting from someone who owes you money for work performed, please contact us now.

6.     Form a Missouri Limited Liability Company to provide protection and to have standing to pursue any legal claims the company may have

A limited liability company can be formed under chapter 347 of the Missouri Revised Statutes. In order to be afforded limited liability protection in the state of Missouri, the organizers/management of a company must register with the Missouri Secretary of State.

Additionally, the Missouri Courts will not recognize a business entity that is not registered in the state. Thus, if the contractor is dealing with a non-paying customer, the contractor will have to standing prior to instituting a formal lawsuit in court. In order to have standing in Missouri, a limited liability company, including any roofers, whether individuals, entities, or contractors, conducting business in the state of Missouri, must register their company with the Missouri Secretary of State.

Many banks will not allow you to open a company bank account without first creating an LLC and preparing an operating agreement, obtaining an articles of organization and an EIN. Additional, there may be tax ramifications on a state and/or federal level for those companies who fail to register their LLC and/or obtain an EIN.

For numerous reasons, it is important to take care of the LLC formation and getting all of your other organizational documentation and affairs in order before conducting business in Missouri. If you need assistance in setting up or modifying an existing business, LLC, or corporation, please contact one of our lawyers for further assistance.

7.     You must allow customers who are paying through their insurance company the opportunity to cancel the roofing contract within 5 days of receiving acceptance or denial from insurance company.

Contractors have to give customers the opportunity to cancel the roofing contract in the event that the insurance company denies their claim.

The relevant portion of section 407.725.3, R.S.Mo., states:

“A person who has entered into a written contract with a contractor to provide goods or services to be paid under a property and casualty insurance policy may cancel the contract prior to midnight on the fifth business day after the insured party has received written notice from the insurer that all or any part of the claim or contract is not a covered loss under the insurance policy.”

Failure to give the customer the option to cancel the contract will be deemed a violation of the Missouri Merchandising Practices Act. Violations of the Missouri Merchandising Practices Act can come with steep consequences and a serious headache that takes the focus off of running your business.

Please call if you have questions regarding statutory or contractual rights relating to roofing jobs.

Conclusion

This article was intended to inform the general public and roofing contractors about some of the important issues surrounding roofing projects and associated contracts/documentation. The article covered several provisions that should be included in roofing contracts as well as certain acts that are prohibited pursuant to Missouri law.

Specifically, the article discussed:

  1. Not using deductibles as a way to induce roof sales;
  2. Refraining from negotiating or representing customers in the insurance claims process;
  3. Include the statutory mechanic’s lien notice in your contract;
  4. Include an attorney’s fees provision in your contract;
  5. Include an interest provision in your contract for outstanding balances.

For those roofing contractors who follow these suggestions, so long as you are generally complying with OSHA requirements, other general statutes, and otherwise conducting fair business, your approach will comport with best business practices in the roofing industry.

If you need assistance or specific guidance from a Missouri construction law attorney, please do not hesitate to contact us. We offer free consultations and can provide you direction in how to move forward in your case.

Please call us now if you’re looking to learn more about your rights as a contractor.

Elements of the Missouri Merchandising Practices Act

Elements of the Missouri Merchandising Practices Act

Missouri Construction Law FAQs

Attorney Answers Common Construction Law Questions

3 Defenses Missouri Construction Lawyers Can Assert in Consumer Cases

Hammer and nails

Defending Missouri Merchandising Practices Act Claims

Any contractors who work on residential property will inevitably have to deal with a difficult customer at some point in their career.

The customer may raise various issues about your work. like complaining about whether the work is defective or not, the aesthetic appeal, and a garden variety of other issues that arise in these situations.   

In the event that a consumer, or “putative consumer,” brings a claim against a contractor on the basis of the Missouri Merchandising Practices Act, the contractor’s attorney should know several defenses to protect the client from such claims.  

This article was designed to provide a few but certainly not all, common defenses used by a contractor in a Missouri Merchandising Practices Act claim case.  

The first defense deals with the issue of damages.

1.No ascertainable damages – the work was not defective, or even if it was defective, no damages resulted

One of the elements of a Missouri Merchandising Practices Act claim is that the damages need to be ascertainable.  Oftentimes the homeowner may be unpleased with the work product of a contractor, but the homeowner will not have actually incurred damages.  

The homeowner’s dissatisfaction with the aesthetics of a contractor’s work product might be an example of an area that may not cause the homeowner actual damages.

This is not always the case, however, as it may be a question of fact for the judge or jury to make a judgment call on as to what the contract says regarding aesthetics and/or whether the work was performed in a good and workmanlike manner.   

Another situation where the homeowner may not incur damages is if a contractor performs defective work on a project but subsequently remedies that defective work.

In any event, the damages element of the Missouri Merchandising Practices Act is a susceptible place which your lawyer should consider attacking in the event you are sued in these types of situations.

2. Superseding/Intervening Force (i.e., third party) caused damages

If the contractor was not the cause of the damages, then obviously the consumer’s claim is subject to attack.  This is a common defense as many projects consist of a slew of different people working on the job simultaneously.  

The work performed by one contractor may cause damage to or adversely affect the work of another contractor.  In these situations, the superseding/intervening force (another contractor) can be a defense to a Missouri Merchandising Practices Act claim.  

Depending on the language contained in the contract, acts of God may also relieve a contractor from contractual duties.  As this defense is specific to the factual circumstances, and in particularly the language in the contract, each case needs to be individually assessed.  

If you have a question about a construction law case, please feel free to contact one of our attorneys.

3. The construction work was not for personal, family, or household purposes

If you’re working on a residence, you still cannot be sure that the residence is owned by a consumer.  This element must be proven by the alleged consumer.  

However, when a project has commercial aspects or when the owner of the property, even if it appears residential, is a commercial entity, you may have a defense to a Missouri Merchandising Practices Act claim.

One example of a susceptible area of attack would be work performed on a rental home. Often times limited liability companies will own rental homes and will have a contractor perform work on their property.  

If you are a construction company defending a consumer protection act claim, you should always check the deed of the property and be cognizant of the entity that is making the payments.

Depending on the factual circumstances, a lawyer defending one of these cases may be well-advised to assert a defense attacking the personal, family, or household element.  

Conclusion: Contractor Defenses Against Consumers on a Construction Project

This article gives a few defenses that you can assert as a contractor if you’re caught in the middle of a consumer protection case.  There are other defenses out there, but you should always consult an experienced construction law attorney when preparing your defense in a case.  

The following is a list of the three potential defenses discussed in this article:

  • No ascertainable damages – the work was not defective, or even if it was defective, no damages resulted
  • Superseding/Intervening Force (i.e., third party) caused damages
  • The work was not for personal, family, or household purposes

Depending on the facts of your case, these defenses could be your liability shield. Your lawyer should be aware of these defenses and, more importantly, should assert them in any applicable cases.  

If you need help with defending a construction defect case or other construction project defense case, contact a construction law attorney here.

St. Louis Construction Contract Attorneys

Federal Courthouse and St. Louis Arch Construction Contract Litigators

Our firm deals with construction contracts on a regular basis.  Nearly all work performed on a construction project is carried out pursuant to a contract with the owner, contractor, subcontractor, or some other party on the project.  

The purpose of the contract is to govern the relationship between the entities and determine the duties and obligations that the contract imposes upon said parties. That’s why when problems occur on the project, you need to know the terms of the contract.  You also should have a lawyer review or draft your contract before beginning a project.  

The lawyer can explain your rights to you, and help you understand your responsibilities on the job.

Assistance with Construction Contracts

In order to protect our clients on a project, our construction law attorneys provide the following assistance with contractual matters:

      1. Reviewing
      2. Drafting
      3. Negotiating
      4. Litigating

The above list is just an example of a few areas where we can help.  If you need any assistance with contracts on a construction project, please contact an attorney at our office, and we can help you sort through any issues.

Answering your Construction Contract Law Question

Issues almost always arise on a construction project.  Sometimes Contractors wonder whether they are supposed to pay for the issue or whether someone else should be footing the bill.  The contract almost always governs these situations.

That is why it is critical to know and understand the terms of your construction contract. On big construction projects the contracts can be quite extensive with voluminous amounts of legalese that can be difficult to understand.

Our construction law attorneys can sort through that dense language and advise you as to how you should best proceed on the project.  Make sure that you know your rights if you’re working on a construction project, and consult with an attorney.

If you have a question about whether your contract is in compliance with Missouri law or whether certain clauses should be added or struck to protect your interests, contact one of our St. Louis Construction Lawyers today.

Other Types of Contracts Our Attorneys Draft and Litigate

Acquisition Agreements
Agent or Agency Agreements
Amendments or Modifications to a Contract
Asset Purchase Agreements
Bill of Sale
Broker-Carrier Agreements
Broker (Real Estate) Agreements
Business Contracts
Change Orders
Confidential Disclosure Agreements (CDA)
Construction Contracts
Unit Price Contracts
Lump Sum or Fixed Price Contracts
Cost-Plus Contracts
Time and Material Contracts
Incentive Contracts
Guaranteed Maximum Price Contracts
Percentage of Construction Contracts
Contract for Building & Sale of Residential Property
Deed of Trust
Employment Agreements
Equipment Use Agreements
Exclusive Limited Buyer’s Agreements
Forbearance Agreements
Guaranty
Independent Contractor Agreement (ICA)
Lease Agreements
Master Services Agreements
Memorandum of Understanding (MOU)
Mortgage
Non-Compete Contracts
Non-Disclosure Agreements  (NDA)
Operating Agreements
Partnership Agreements
Personal Guaranty
Prenuptial Agreements
Professional Services Agreements
Promissory Note
Power of Attorney
Purchase Order
Real Estate Contracts
Sale of Goods Contracts
Sales Commission Agreements
Security Agreements
Service Contracts
Settlement Agreements
Subordination Agreements
Transportation Agreements

Also, check out our article regarding 7 Provisions that Should be in Every Construction Contract

3 Safeguards Consumers Have Against General Contractors

Tape Measure

Consumer Protection in a Construction Law Case

Most people get their homes remodeled or perform some type of addition or other construction project on their homes. This is just a part of life, and it usually signifies moving up the ladder.  However, most people do not anticipate that a contractor will destroy their kitchen or use poor craftsmanship when repairing a roof, which causes substantial water damage to the home.  

In these situations, most people don’t know what to do.  They spent most of their reserve cash on the remodel. They have never been involved in a lawsuit, and they don’t know what to do.  

This article was written by a St. Louis Construction law attorney and was meant to address the issues described above and talk about some of the benefits that consumers have in a situation like that.

While it seems like a tough road, and perhaps will be, consumers do have certain advantages when a construction project goes south in Missouri.

1. Jury usually sides with the little guy & awards big damages

The U.S. Department of Justice (“USDOJ”) conducted a 2005 study on damage awards in cases in the state courts throughout the United States.

The USDOJ found that juries awarded an average of $74,000 in contract cases versus a petty $25,000 when the case was decided by a judge. http://www.bjs.gov/content/pub/ascii/cbjtsc05.txt

Many members of a jury decide a case based on emotion, regardless of whether it is a construction law claim or not.  

They’ll ask themselves what would be a fair outcome, but they’ll also consider the financial positions of the parties involved. Often times, a construction company has a lot of money and can overpower a consumer.  

The jury can see this and will account for this factor, usually empathizing with the little guy.  This fact alone makes it extremely important to hire a well-versed St. Louis construction lawyer, so you don’t fall victim to the caprice of the jury.  

A good construction lawyer will usually be able to preclude evidence that leads to the financial status of the company involved in the proceeding.  To the contrary, a good construction law attorney who represents a consumer may be able to expose this fact and capitalize on it with the jury.  

In any event, it is important to know that that when you deal with a jury, it is always a roll of the dice because of the emotional factor.  

Construction companies have to ask themselves whether they are willing to bet the business on the litigation.  A good lawyer can advise the construction companies as to the proper way to proceed in such instances.

To make an example of the contrary, a good construction law attorney representing a consumer will play the jury’s emotions by telling a captivating story, keeping the jury’s attention and swaying their emotions.  

For those reasons, choosing the right attorney to represent your company, or you as a homeowner, is critical, especially if the stakes are high.

The next question you might ask yourself then, is how am I going to afford a good St. Louis Construction lawyer?

The answer is: your construction lawyer could potentially be free…

2. Attorneys Fees Could be Paid for Under the Missouri Merchandising Practices Act

The Missouri Merchandising Practices Act (“MMPA”) is an act in Missouri that allows for attorney’s fees to the prevailing party (at the court’s discretion).  

R.S.Mo. 407.025, denominated the Merchandising Practices Act, states the following:

The court may, in its discretion, award punitive damages and may award to the prevailing party attorney’s fees, based on the amount of time reasonably expended, and may provide such equitable relief as it deems necessary or proper.

http://www.moga.mo.gov/mostatutes/stathtml/40700000251.HTML

Beware and note, the phrase: may award to the prevailing party attorney’s fees…  

First, the term may means discretionary, and in practice, the Court decides attorney’s fees under the MMPA. So really whatever the court believes the outcome should be.

Also, to the prevailing party: this makes it a high stakes game because the loser could end up footing two attorneys’ bills.

Missouri courts are supposed to take into consideration the purpose of the statute, which is typically lenient toward consumers, thus giving the consumers more incentive to pursue their claims against the contractors.

There’s also the underlying goal of reaching an equitable result, which means that the more egregious the case is–for example if a contractor tries to scam a consumer–the more likely the court will award attorney’s fees.

In order to pursue attorney’s fees, you first must have expenses from an attorney first–this is the difficult task, but you may be able to arrange a contract with the attorney to help you survive the litigation process from a financial standpoint (with the hopes or expectation that you will ultimately recover attorney’s fees).

3. Construction Law Cases under the MMPA are Fairly Easy to Prove

Usually a consumer case is fairly easy to prove in the context of a construction law proceeding.  

That’s because there are four elements in a Missouri Merchandising Practices claim (consumer construction law claim), and many of them, by the the nature of the MMPA elements, are already proven (or stipulated to) in a construction law case.

The elements of the MMPA relating to construction law are roughly the following:

  1. The homeowner purchased merchandise from the general contractor
  2. The purchase was for personal, family, or household purposes
  3. The homeowner suffered an ascertainable loss of money or property
  4. The loss occurred as a result of an unlawful act under the Merchandising Practices Act.

Below, each element will be discussed:

A.The homeowner purchased merchandise from the general contractor

Merchandise is defined in the Missouri Revised Statutes section 407.010 as “any objects, wares, goods, commodities, intangibles, real estate or services”.

Services is the key word in the statute.  Any general contractor hired by a homeowner is providing services.  That alone satisfies the first element.  

B. The purchase was for personal, family, or household purposes

This is an easy element to satisfy as well.  One of the few difficulties that may arise is if the home upon which the general contractor is working happens to be a rental home.  Otherwise, the work being performed on the home is clearly for personal, family, or household purposes.  

C. The homeowner suffered an ascertainable loss of money or property

This element again is easily satisfied if the contractor screws up your home.  The money that you spent on the renovation or construction project was basically just wasted on the contractor’s failed performance.  

If the contractor did not cause a loss of money or property against the contractor, then the homeowner has no business bringing the lawsuit in the first place.  Accordingly, suffering an ascertainable loss of money or property is yet another element that a homeowner can prove by showing that the work was not performed according to the contract or that it was not performed in a good and workmanlike manner.  

Usually in a trial, this element can be proven through a subsequent contractor who came to perform the repairs or to provide an estimate regarding what it takes to repair the defective work.

D. The loss occurred as a result of an unlawful act under the Merchandising Practices Act

The following is a list of unlawful acts that can be committed under the Missouri Merchandising Practices Act:

  • deception
  • fraud
  • false pretense
  • false promise
  • misrepresentation
  • unfair practice
  • concealment of a material fact
  • suppression of a material fact
  • omission of a material fact

This is by far the most difficult element of the MMPA that a homeowner has to prove. Most attorneys will argue that defective work under a contract is merely defective work, and perhaps breaches the warranty that each construction contract imposes: the duty to perform the work in a good and workmanlike manner.  

The lawyer will continue to arue: “without some conscious, intentional misrepresentation, all the homeowner has is a breach of contract claim.”

However, Missouri law has been pretty clear that in an MMPA claim, the conduct of the actor is what is the most important.  

Thus, the rebuttal argument from opposing counsel (homeowner’s attorney) becomes the following: “the contractor made representations to the homeowner that he was competent and experienced in performing the renovation work, but the contractor either (1) did not have the experience and competence as represented or (2) committed an unfair practice by cutting corners to save money when the contractor knew the procedure to perform the work properly.

Accordingly, many homeowners, despite all odds seemingly stacked against them, do have a legitimate chance in a battle against a big construction company.  

In order to fully protect these rights, you should always contact a competent construction law attorney in St. Louis.  

Conclusion as to Why Construction Law Cases are Teed up for Consumers

This article told you 3 reasons why consumers may have an advantage in a Missouri construction law case.  

  1. The jury usually sides with the consumer because they feel empathy for that person or for the family suffering from the shoddy work.
  2. Attorney’s fees are a potential threat to the contractor–beware, however, attorney’s fees could be imposed against the consumer, but such cases are rare
  3. Elements of the claim (MMPA) are fairly easy to prove

While it may seem like a daunting task for a consumer to fight against a big construction company, we have St. Louis construction law attorneys that will help you fight back.  

We know construction law well, and we know how to protect consumers from these terrible situations.  

Please contact our lawyers if you are faced with a situation like this.  Our lawyers have handled numerous cases like this in the past, and we are happy to discuss your case with you.  

Contact a St. Louis Construction Lawyer here.

3 Benefits the Missouri Prompt Payment Act Provides Contractors

Drill Bits

General Background on the Missouri Prompt Payment Act

Are you a contractor that has not been paid on a construction project?  Looking for an attorney to help you collect?  

You might be able to get your attorney’s fees paid for, and you might be able to reap the benefits of a number of other perks that accompany a Missouri Prompt Payment Act claim.  

The Missouri Prompt Payment Act is a group of statutes given the prompt payment title because of their ultimate purpose–these statutes were enacted to ensure that contractors on a construction project are expeditiously paid.  

The legislature noticed that contractors’ or owners’ failure to make payment on a construction project was becoming a significant problem, and there needed to be a remedy.  

Thus, the legislature incentivized payment by imposing various penalties.  

This article was written to discuss a few of those penalties as well as the benefits for contractors that make a Missouri Prompt Payment Act claim.  

1. Immediate Payment on the Project

As stated above, the goal of the Missouri Prompt Payment Act is to pressure the owner or general contractor into making payment as quickly as possible, so the contractor claimant receives the money to which s/he/it is entitled.  

The statute sets forth the time at which payment should be made.  The statute, R.S.Mo. section 431.180, the Missouri Private Prompt Payment Act, defers to the contract: “all persons who entered into a contract for private design or construction work after August 28, 1995, shall make all scheduled payments pursuant to the terms of the contract.”

In the event that those persons do not make payment, the statute provides a civil remedy that comes with other perks.

2. A Means to Pay for Your St. Louis Construction Law Attorney

Despite the incurrence of unwanted fees from hiring an attorney, you might be able to recover any monies paid out for attorney’s fees pursuant to Missouri statutes.

If you hire a St. Louis Construction Law Attorney, the statute provides a means to pay for him or her.  

The statute states the following: [t]he court may in addition to any other award for damages, award…reasonable attorney fees, to the prevailing party.” R.S.Mo. section 431.180.

Keep in mind that attorney’s fees are not guaranteed.  

The statute merely provides the potential to collect attorney’s Fees.  In any case, the potential to collect attorney’s fees creates leverage in the settlement of construction project disputes and that puts pressure on the owner or the non-paying contractor to immediately make payment.

If that entity or person fails to pay, they take the risk of potentially paying your attorney’s bill too.  

3. 18% Interest Rate for Unpaid Work under the Contract

The Missouri Prompt Payment Act Provides for an 18% interest rate. This is an incredible rate considering the ordinary statutory rate in Missouri is 9%.

From the time a claim becomes liquidated (an undisputed amount that is due and owing), interest begins to accrue.  This is a heavy burden for a non-paying owner or general contractor to foot if they wish to challenge the amounts because litigation could last for several years.  

If the court or jury finds against the non-paying owner or contractor, they could also be footing a heavy bill as a result of the additional interest. For this reason, you should consult a competent St. Louis Construction lawyer to help you determine your rights and decide whether payment should be forthcoming or whether a party has legitimate grounds to withhold payment.  

Conclusion

This article just told you about three benefits that a contractor can avail himself of through the Missouri Prompt Payment Act, when attempting to collect payment on a construction project.  

The three advantages a contractor has by using the Missouri Prompt Payment Act are the following:

  1. The statute calls for immediate payment in accordance with the contractual terms thereof.
  2. The statute provides for attorney’s fees to the prevailing party–remember this is discretionary.
  3. The statute also provides for 18% interest on amounts due and owing, which is twice the normal Missouri statutory interest rate.

For all of the above reasons, the Missouri Prompt Payment Act can be a very effective tool for contractors who are attempting to collect on a construction project.  

Because litigation can be a very complex process, contractors that need help collecting for work performed should contact a St. Louis construction law attorney for assistance.

5 Ways to Collect Payment on a Missouri Construction Project

Do Not Enter Construction SignGeneral Discussion about the Collection Process

There are numerous ways to collect payment if you are a contractor owed on a construction project in Missouri.  This article will tell you the five most commonly used methods of collecting when an owner or general contractor fails to pay on a project.  

1. File a Mechanic’s Lien

The first, and perhaps most powerful, way of collecting on a Missouri construction project is by filing a mechanic’s lien statement.  Most contractors will attempt to do this on their own.  While a handful of the do-it-yourself liens that are filed may withstand attack, the majority of the mechanic’s liens filed pro se can easily be vitiated with the basic mechanic’s lien defenses.  

See the article called 4 Defenses to Mechanic’s Liens in Missouri for more information on defending or properly filing a lien in Missouri.  

2. Make a Bond Claim

Not all projects have bonds, but when a bond exists, it acts almost as insurance on the project.  Public works projects almost always require a bond because a governmental entity is the owner on the project, and it would incredibly debilitate that governmental entity’s credibility and image if a contractor were able to lien up the government owned property.  

For example, if an electrician performs work on the city hall building and is not paid for the work performed, the electrician would put a mechanic’s lien on city hall.  In order to prevent

3. Make a Breach of Contract Claim

Even if your lien is invalid or you did not properly preserve your lien rights, you still likely have a claim for breach of contract on a construction project.  Usually construction projects are of a significant enough magnitude to warrant a written contract.  

However, occasionally contractors who are trying to keep the job informal or are “old school” will not sign a written contract that lays out the scope of the work and/or terms and conditions of the contractual agreement.  

Are oral contracts enforceable on a construction project?

As a lawyer, a question that we are often asked is whether an oral contract on a construction project is enforceable. The general answer is yes.  There are certain contracts that are required, by Missouri law, to be in writing.  

4. Make a Quantum Meruit Claim

Quantum meruit basically means whatever is deserved or whatever it’s worth.  It’s a claim based in equity as the policy behind a quantum meruit claim is to effectuate a fair outcome for the parties. For example, if work is performed for someone, it is only fair that the person receiving the work, pay the fair value for that work.  

A quantum meruit claim is secondary to a contract claim.  Some lawyers use it as a catch-all in the unlikely event that the court finds the contract invalid.  Although there would no longer be a valid claim for breach of contract, fairness would dictate that the contractor should be paid in a manner commensurate with the amount of work performed.  

5. Make a Missouri Prompt Payment Act Claim

Last but not least, and perhaps the biggest hammer in collecting on a construction law case: The Missouri Prompt Payment Act.  This is one of the best ways to collect because it comes with interest at a rate of 18% per annum.

That means 1.5% per month.  The statutory interest rate in Missouri is 9%, so this is double the regular statutory rate.

In addition to the elevated interest that a claimant can obtain, the claim also comes with reasonable attorney’s fees.  

This is a major threat for a non-paying contractor or owner as they not only risk paying the full amount for the work performed, there is a significant amount of fees and interest racking up.  

The Missouri Prompt Payment Act provides for certain amounts of time in which the contractor has to make payment of an undisputed amount.  

If the owner or contractor does not make payment within that time period, interest will start to accrue (assuming the claimant has complied with all documentation submission requirements as well as the other contractual obligations.

See 3 Benefits the Missouri Prompt Payment Act Provides Contractors for a more detailed discussion of the Missouri Prompt Payment Act.  

Conclusion

There are a number of ways to get paid on a construction project. You just learned about five different ways above.

The following is a recap of the different methods a contractor or subcontractor can use to get paid on a construction project:

  1. File a mechanic’s lien
  2. Make a bond claim
  3. Make a breach of contract claim
  4. Make a quantum meruit claim
  5. Make a Missouri Prompt Payment Act claim

You’ve learned the starting points for collecting, however there are certain procedural obstacles and technicalities when pursuing any of these claims.  You would be well-advised to consult an attorney if you plan on utilizing any of these methods.  

If you have more questions about collecting for work performed on a construction project, please feel free to contact our St. Louis construction law attorneys with questions.

General Overview of Missouri Construction Law

Construction Law Explained

No country in the world can prosper without the proper infrastructure.

Infrastructure refers to the fundamental need of a network of roads, bridges, telecommunications, water supply, airports and airways, hospitals etc. which helps the economy function.

Construction is the industry that plays a key role in providing this infrastructure.

Construction itself can be broadly defined as the process of planning, designing, financing, developing, and building something (whether that be a house, road, or dam).

In today’s age, the Construction Industry accounts for 6 to 9 percent of the total GDP of all developed countries. There is a lot of money being exchanged in the construction law industry, and for that reason, its important to know your rights on a construction project.

This article was meant to provide a general discussion about construction projects in general

Components of a Construction Team

Construction can sometimes be a complex process.  It requires the involvement of a whole team of people working together.

Some think it just involves engineers and architects and a contractor. However, its not limited to these few people. There’s a whole human resource behind it.

There are numerous people that make up a construction team, which include:

  • project manager,
  • architect,
  • construction engineer,
  • finance manager, and
  • a construction lawyer.

My role as an attorney is to protect contractors rights, so rather than discussing all the components of a construction project, this article and the other articles on this website will hone in on the legal aspects, contractual negotiation and disputes, collection efforts, and common pitfalls that occur during construction projects.

Construction Law

The law deals with nearly every matter that touches a construction project.

The following are a few examples of commonly litigated construction law matters:

  • disputes regarding the compliance with specifications and design in the construction of a building,
  • the duties and obligations of the electrician pursuant to the contract,
  • construction defect claims, breach of contract, and/or
  • negligence on the project either in failure to comply with the contractual specifications or negligently causing injury on the project.

While the range of coverage regarding construction law is quite expansive, it makes the most sense to first discuss a little bit about construction contracts as that creates a foundation and governs the interrelationship between the parties on the project.

What Laws Govern Missouri Construction Contracts?

In Missouri, a construction contract is governed by Missouri statutes and case law but is also influenced by the Supreme Court of the United States’ decisions. The Supreme Court of the United States’ decisions provide the basic framework of the law and the Missouri statutes and cases give guidance regarding more specific issues that arise in construction, including, but not limited to:

  • Construction Contracts
  • Substantial Compliance vs. Material Breach of a Contract
  • Privity and the interrelationship between contractors
  • Design Professionals in the event of Negligence
  • Breach of Warranty, both expressed and implied
  • Misrepresentation
  • Fraud
  • Unjust Enrichment
  • Tortious Interference with contract
  • Strict Liability Claims
  • Indemnity Claims

Tip: Due to the complexity of a construction project and the potential pitfalls that could arise from nuances in the above law, you should always contact a reliable St. Louis Construction Lawyer before commencing any construction project in Missouri.

The attorney will walk you through the proper procedure and ensure that your contract has the necessary provisions in it to protect your rights.

Below are 3 important facets in a Missouri construction project: Time, Change & Termination:

1. Changes to the Construction Contract:

There is usually a provision in the construction contract which deals with changes or modifications to the scope of work or condition. If there has to be any change in the scope or price of the project, the owner must approve it prior the start of the construction.

See C.P. Jhong, Annotation, Effect of Stipulation, in Private Building or Construction Contract, That Alterations or Extras Must Be Ordered in Writing, 2 A.L.R.3d 620 (1965).

Article 7 of AIA Document A201-1997, for example, contains three classifications of amendments which each differ slightly:

  1. Change Orders
  2. Construction Change Directives.
  3. Minor Changes

This website briefly explains these concepts, but you  should contact a St. Louis Construction Lawyer to learn more about your  contractual rights in case a change is made to the construction contract.

2. Time of Performance:

If in the construction contract, no completion time is mentioned and a dispute arises regarding delays or timely completion, Missouri law expects that the construction will be completed in a reasonable time. See ArtCraft Cabinet, Inc. v. Watajo, Inc., 540 S.W.2d 918 (Mo. App. W.D. 1976). Failure to do so may give rise to damages claims from the party in the tier above on the construction project food chain.

A good construction contract, like AIA Document A201-1997, General Conditions of the Contract for Construction, uses the time between the commencement of the work to the time of substantial completion as the total amount of time for completion allowed for the contractor, with very few exceptions.

A good construction law attorney will include this type of provision into the contract, accounting for any anticipated delays or hiccups in the project.

3. 3 Ways a Construction Contract Can be Terminated:

Termination of a construction contract can occur in three ways at least:

  1. Termination for convenience without the fault of any of the parties.
  2. Termination by mutual agreement.
  3. Termination by performance one party because the material breach of the other party.

Before terminating any contract, it is important to know your rights.  You can avoid exorbitant expenses if you follow the proper procedure before terminating.  In order to know your rights and whether you have the legal right to terminate a contract, you should always consult with an experienced construction law attorney prior to making any drastic moves.

Conclusion

Any party who wishes to start a construction project in Missouri, should first devise a proper plan. This plan should include hiring a number of different people for the project, including

  • a project manager,
  • an architect,
  • construction engineer,
  • St. Louis Construction Lawyer (if it’s a Missouri project),
  • finance manager.

There are so many moving parts on a construction project that its difficult to try to handle the legal aspects of it while juggling the other tasks.  Contact a knowledgeable St. Louis Construction Law attorney to help you with contract negotiations, collecting on a job, or defending a consumer lawsuit.

If you hire an attorney, they will prepare a defense plan and it will increase your chances of success in the litigation. Or, at the bare minimum it will create leverage to resolve the dispute.

As we all know a significant amount of disputes arise during a construction project. If you retain an attorney before the dispute arises, you may be able to prevent it from happening in the first place.  “An ounce of prevention is worth a pound of cure.”

Don’t let that phrase haunt you when your in the middle of an expensive lawsuit for something that a Construction Law attorney could have prevented by including a simple provision in the contract.  Get your contracts reviewed by a local St. Louis attorney, so you’re in compliance with the applicable Missouri and St. Louis construction law.

If a dispute ever does arise, and the project is in Missouri, you should immediately contact a St. Louis Construction Lawyer who can guide you through the legal aspects of the contract.