When a contractor walks away from a commercial construction project before completing the work, the consequences can extend far beyond the unfinished building. Business owners and developers may face lost revenue, financing problems, additional construction expenses, and disputes with subcontractors or suppliers.
In Louisiana, a contractor who abandons a project without legal justification may be liable for breach of contract and damages resulting from the failure to complete the agreed-upon work. However, the property owner’s rights and available remedies depend on the construction agreement, the reasons work stopped, and the losses involved.
When Does an Unfinished Project Become a Breach of Contract?
Not every construction delay constitutes abandonment.
A contractor may temporarily stop work because of weather, material shortages, payment disputes, permitting issues, or circumstances beyond the contractor’s control.
Abandonment generally becomes a more serious legal issue when a contractor stops performing its contractual obligations without adequate justification and does not intend to complete the project.
Louisiana Civil Code Article 2769 provides that a contractor who fails to perform agreed work, or fails to perform it in the agreed manner or time, may be responsible for resulting damages.
Before declaring a breach, a business owner should examine the contract’s provisions regarding deadlines, default, notice, opportunities to cure, and termination.
Can a Business Owner Recover the Cost of Hiring Another Contractor?
Potentially. When a contractor fails to complete a project, the owner may need to hire another company to finish the work.
Recoverable damages may include reasonable additional completion costs, expenses associated with correcting defective work, and other losses legally attributable to the breach.
For example, imagine a business contracts for a $600,000 commercial renovation. After receiving substantial progress payments, the contractor stops working. The business then must pay another contractor significantly more than the remaining contract balance to complete the project.
Depending on the contract and circumstances, the additional reasonable costs may form part of a claim for damages.
The owner must still establish the breach, prove the claimed losses, and account for payments or expenses that would have been incurred even if the original contractor had completed the job.
What If the Business Loses Revenue Because Construction Is Delayed?
Commercial construction delays can prevent a business from opening, expanding, or operating as planned.
Lost profits or other delay-related damages may be recoverable in appropriate circumstances, but they require proof. The contract’s limitations on damages and Louisiana’s rules governing contractual liability also matter.
Financial projections alone may not establish the amount of a loss. Prior operating history, contracts with customers, business records, and other evidence may help demonstrate the economic consequences of a delayed project.
What Should You Do When a Contractor Stops Working?
A business owner should take steps to protect the property and preserve evidence without unnecessarily creating additional contractual disputes.
Important actions may include:
- Reviewing the construction contract and termination requirements.
- Documenting unfinished or defective work with photographs and written reports.
- Preserving payment records, invoices, change orders, and communications.
- Obtaining an independent assessment of the project’s condition.
- Identifying subcontractors and suppliers who may claim unpaid amounts.
Consulting an attorney before formally terminating the agreement or hiring a replacement contractor.
Commercial property owners should also consider potential claims under Louisiana’s Private Works Act. Depending on the circumstances, unpaid subcontractors and suppliers may have rights affecting the property even when the owner has already paid the general contractor.
Can the Contractor Claim the Owner Caused the Problem?
Yes. Contractors may argue that work stopped because the owner failed to make required payments, repeatedly changed the project scope, denied access to the property, or otherwise prevented performance.
These disputes often require a careful review of the parties’ contractual obligations and the project history.
A contractor’s decision to leave the job does not automatically establish liability. Likewise, a contractor cannot necessarily avoid responsibility merely by claiming that the project became more expensive or difficult than anticipated.
Possibly. The right to terminate depends on the contract, the nature of the default, and applicable Louisiana law. Improper termination can expose the owner to additional claims.
Depending on the circumstances, an owner may seek recovery of payments associated with work that was not performed, along with other provable damages.
Louisiana’s Private Works Act provides certain claim and privilege rights. These issues should be addressed promptly because filing requirements, deadlines, and defenses can be complicated.
Potentially, if the losses are legally recoverable and supported by sufficient evidence. Contractual limitations and the foreseeability of damages may affect the claim.
Protect Your Business After a Construction Contract Dispute
An abandoned commercial construction project can create overlapping problems involving contracts, financing, property rights, and business operations.
Veazey Felder represents Louisiana businesses in commercial disputes and litigation. If a contractor has failed to complete a project or your business is facing a construction-related dispute, contact the firm to discuss your legal options.