Top 5 Contract Mistakes That Lead to Construction Disputes in Michigan

Most construction disputes don’t start in the field, they start in the contract.

We’ve seen it time and time again: projects that look solid at the outset begin to unravel because key terms weren’t clearly defined upfront.

In Michigan’s construction industry, small contract issues can quickly turn into costly legal disputes.

1. Vague Scope of Work

If the scope of work isn’t clearly defined, you’re leaving room for interpretation, and conflict.

Contracts should clearly outline:

• What work is included

• What is excluded

• What constitutes “substantial completion”

• Remedies available to the contract in the event of a material breach

Ambiguity here is one of the most common triggers for disputes and breach of contract claims.

2. Incomplete Payment Terms

Many contracts address basic payment schedules but fail to account for real-world complications.

Important provisions often missing include:

• Payment timing tied to project milestones

• What happens in the event of delays

• Retainage terms

• Interest or penalties for late payment

Without these, enforcing payment becomes significantly more difficult.

3. No Defined Change Order Process

Change orders are inevitable, but without a clear, written process for approval and pricing, disagreements are almost guaranteed.

A strong contract should require:

• Written approval before work begins

• Clear pricing terms

• Documentation requirements

• Prevailing party’s attorney fees

This is especially important when disputes arise over additional work performed outside the original agreement.

4. No Dispute Resolution Clause

Many contracts fail to specify how disputes will be handled.

Including a dispute resolution provision, such as mediation, arbitration, or litigation, can:

• Reduce costs

• Streamline resolution

• Avoid unnecessary delays

Without it, parties often default to more expensive and time-consuming legal processes.

5. Unclear Risk Allocation

Construction projects involve inherent risks, delays, defects, unforeseen site conditions.

If the contract does not clearly allocate responsibility, those risks often turn into disputes later.

Well-drafted contracts address:

• Indemnification

• Liability limitations

• Responsibility for delays and damages

• Prevailing party’s attorney fees

Better Contracts, Fewer Disputes

A strong contract is more than legal protection, it’s a roadmap for how the project is completed timely, and within the budget framework.

When done correctly, it not only reduces the likelihood of disputes but also strengthens your position if one arises.

If you’re dealing with a construction dispute, delayed payment, or contract issue, taking the right steps early can protect your business and your bottom line. Contact Sadecki & Associates at 248.328.1300 to discuss your situation.