Can a Subcontractor Be Removed From a Construction Project in Michigan?

Construction projects depend on contractors and subcontractors completing their work according to agreed schedules, specifications, and contractual requirements.

When a subcontractor fails to perform, causes repeated delays, performs deficient work, or otherwise fails to meet contractual obligations, a general contractor may consider removing the subcontractor from the project.

However, terminating a subcontractor can create additional legal and financial disputes if the termination does not comply with the construction contract.

At Sadecki & Associates, we represent contractors, subcontractors, developers, suppliers, and construction businesses throughout Michigan in construction contract disputes, termination matters, payment disputes, and commercial litigation.

Why a Subcontractor May Be Removed From a Project

Disputes involving subcontractor performance can arise for many reasons.

Potential issues may include:

• Failure to perform required work

• Defective or incomplete work

• Repeated project delays

• Failure to provide sufficient workers or materials

• Failure to follow project specifications

• Safety or compliance concerns

• Other alleged contract violations

Whether these circumstances justify termination depends on the subcontract and the facts surrounding the dispute.

Review the Subcontract Before Taking Action

The subcontract is one of the most important documents when evaluating whether a subcontractor can be removed.

Construction contracts frequently contain provisions describing when termination is permitted and what procedures must be followed.

The agreement may require written notice of a default and provide the subcontractor with an opportunity to correct the problem.

If these procedures are not followed, a termination that appeared justified may lead to a separate breach of contract dispute.

Notice and Opportunity to Cure

Some construction contracts provide a party with an opportunity to cure an alleged default before termination occurs.

For example, a subcontractor accused of falling behind schedule may be given a specified period to increase staffing or correct performance issues.

Written notices should clearly identify the alleged problem and preserve documentation showing how the subcontractor responded.

Emails, project schedules, photographs, inspection records, project management software, daily reports, and other project documents may become important if the dispute later results in litigation.

Termination for Cause and Termination for Convenience

Construction agreements may distinguish between termination for cause and termination for convenience.

Termination for cause generally involves an alleged contractual default or performance problem.

Termination for convenience may allow a party to end the relationship without establishing that the other party breached the agreement, subject to the terms of the contract.

The financial consequences of each type of termination may be different.

For this reason, contractors should understand which contractual provision applies before removing a subcontractor.

What Happens After a Subcontractor Is Removed?

Removing a subcontractor does not necessarily end the dispute.

Questions may arise regarding unpaid work, materials already purchased, equipment at the project, replacement contractor costs, project delays, and responsibility for completing or correcting existing work.

The general contractor may also need to hire another subcontractor quickly to prevent further delays.

The contract may address how these costs and obligations are handled.

Document Performance Problems Before Termination

Construction disputes often depend heavily on project documentation.

A contractor considering termination should preserve records showing the subcontractor's performance and the steps taken to address the problem.

Clear documentation may help establish what occurred and whether contractual procedures were followed.

Waiting until after termination to organize the project record can make a dispute more difficult to evaluate.

Frequently Asked Questions About Removing a Subcontractor in Michigan

1. Can a general contractor remove a subcontractor from a project?

Potentially. The right to terminate or remove a subcontractor depends on the subcontract, the circumstances involved, and whether required termination procedures are followed.

2. Does a subcontractor have to receive notice before termination?

Some contracts require written notice and an opportunity to cure an alleged default. The specific subcontract should be reviewed before any action is taken.

3. Can a terminated subcontractor still claim payment?

A subcontractor may claim amounts for work performed or raise other contractual claims. The parties' rights depend on the agreement and circumstances surrounding the termination.

4. What documents are important in a subcontractor termination dispute?

The subcontract, written notices, emails, schedules, photographs, invoices, project reports, and other records regarding performance may all be relevant.

Construction Contract Dispute Representation Throughout Michigan

Removing a subcontractor can affect project costs, scheduling, payment obligations, and relationships with other parties involved in the construction project.

At Sadecki & Associates, we represent contractors, subcontractors, developers, suppliers, and construction businesses throughout Michigan in contract disputes, termination matters, and construction litigation.

If you are involved in a subcontractor performance or termination dispute, contact Sadecki & Associates to discuss your legal options.

Disclaimer: This blog is provided for general informational purposes only and does not constitute legal advice. Every legal matter is different, and the information provided may not apply to your specific circumstances. For legal advice regarding your individual situation, contact Sadecki & Associates to discuss your matter with an attorney.