Contractor claims surge

The credit squeeze is being blamed for a rise in construction claims.

In the third quarter of 2008 there were 32 construction cases filed- a 10% increase on the same quarter in 2007.

Many disputes have arisen between contractors and developers, as both parties have felt the effects of the economic slowdown.

Stuart Nash, a partner in McGrigor's construction department, says the relationship between the parties has changed.

"When a developer tells a contractor that they will not pay the full bill for work as they feel the contract has not been properly fulfilled the tendency has been for the contractor to accept that through gritted teeth. They reasoned that there was no point in getting into an acrimonious court dispute with a client that should be their future source of work. The credit crunch has changed all that.

"With the slowdown in the construction sector contractors worry that there might not be a 'next project' from that client so they have less of a motivation to make concessions over their bill. The contractors figure that if there isn't going to be any guarantee of repeat business why shouldn't they try to force their client to pay in full?"

Nash also believes that it will be the firms which are suffering financially which will face the most claims. "If you suspect that your client isn't going to be aroudn for ever you are going to be eager to pursue them as soon as possible" he adds.