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How to cancel contract and which arbritrator to use. Location Garland TX

TexasConstruction ContractNotice of Termination

Hi, I signed a contract with a general contractor to construct a church sanctuary. The estimate and budget was $1.3m. The budget include payment for architectural drawings, MEP etc. The contract include the work to be performed between Jan and completed in July same year with an advance payment of #35k to get the drawing started etc. After the contract was signed on 1/13, and the client gave the general contractor a preliminary drawing from an achitech indicating what needs to be build, the general contractor only put dimension on the initial drawings that was handed over to him and also produced a 3D on how the building will look like after almost 31/2 months of initial payment of $35k. Many times, the general contractor cancel meetings with the client, or after agreeing on a set date to meet, the general contractor will not show up. No call no show many times. This is the 4th month into the contract, nothing has been done. The client need to get approved by the bank for construction loan, and the banks need to approve the general contractor, but the general contractor did not provide the bank with the documents required for approval since the contract was signed. The client want to cancel the contract now. On the contract, it shows that dispute can be settled with arbitration. Pls advice on how the church can recover the money back. Thank you.

3 replies

May 9, 2021

The legal analysis would start with a review of the contract, and then extend to the general conditions, and to the communications which have occurred. If the contract provides for a termination for convenience, that could be the easiest way to terminate the contract.

If you wish to terminate for default, that will require a paper trail that demonstrates beyond question that the contractor has breached the contract. You should consider preparing a letter to mail by certified mail, return receipt requested, to the contractor to set out the facts and to demand the relief that you want. Include a list of defaults by the contractor for the contract. Make sure that your letter is professional and business like as it may be evidence later.

When the contractor does not respond appropriately, you can consider retaining another contractor to provide an estimate to correct/complete the first contractor's work. Make sure that the second contractor itemizes his invoices and lists the costs to correct/complete the first contractor's work. You cannot charge the first contractor with the cost of work that was not within the first contractor's scope of work.  

Once you have tallied the costs associated with correcting/completing the first contractor's work, you can consider suing him to recover those costs. If you only seek the amount of the deposit that the contractor did not earn, you can consider filing suit in small claims court. The jurisdictional maximum for small claims court in Texas is now $20,000. So, if your claim exceeds that amount, you will have to sue in County or District Court. In small claims court, you can represent yourself. In County or District Court, you will have to retain an attorney. However, under Texas law, you would be entitled to recover attorney's fees if you prevailed.

Good luck.

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May 10, 2021

Hello,

Are you a subcontractor or the church? The analysis is different depending on the side.

Subcontractor
You are going to be hard pressed on standing to litigate a matter between the GC and the Church if you are a subcontractor.

Your primary concern is making sure your accounting is correct and that you are not in possession of any retained funds that would have been paid had your work been further required.

After that, run (don't walk) away.

Church
First, send a demand letter.

Second, file suit in District Court with the proper causes of action. It may get moved to arbitration so abate the District Court case until conclusion of the arbitration. The amount in dispute, for purposes of arbitration, is the $35,000, not the $1.3M so your the Plaintiff's cost to initiate arbitration is $2,000+ to start.

For the Church to recover the full benefit of the money they spent, this may very well be outside of the jurisdiction of small claims court. If there's an arbitration clause somewhere in the contract, this is outside of the jurisdiction of small claims court because an arbitration award has to be confirmed in District Court anyway.

If you would like to convey additional details, feel free to give us a call.

E. Aaron Cartwright III
214.789.1354
Aaron@EACLawyer.com

1 person found this helpful
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May 11, 2021
Yes, there's an arbitration clause somewhere in the contract.
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