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Contractor Law | What Happens If A Contractor Abandons A Job?

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Updated March 7, 2021
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No contractor wants a job to fall through or to ruin a relationship with a client. But what if a client abuses the conditions of a contract? What if a contractor has concerns about a job site? Have you ever thought, “What happens if I walk away?”

We’re here to help smart contractors make the best possible choices by presenting all the facts. By assessing risks and rights, we’re going to answer, “What happens if a contractor abandons a job?”

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What Is Abandonment?

Abandonment means “to intentionally give up or surrender an interest, claim, or right.” But how does that affect your contracts?

Quitting a job is not always the same as abandonment, but they can cross over. The legal definition is dependent on the intention or reason for leaving. Are you going to protest conditions? Are you ceasing all contact with an employer?

If you have no intention of returning or reclaiming rights, that is abandonment. If you finish work on an unfinished project to negotiate with a client, you’re in a grey area. But when negotiations end unsuccessfully and the work remains stopped, that’s abandonment.

There is also contract abandonment, where both parties included in a contract mutually agree to abandon a job. When both sides violate terms, both sides can agree to end the agreement. Through communication, a mutual understanding can stop a broken deal from developing into a serious legal situation.

Reasons for Abandoning a Job

A contractor’s rights and consequences depend on the reasons for abandoning a job.

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Payment Disputes

Slow payments are unfortunately common in construction. Some delays are reasonable, but there’s a thin line between getting paid later and getting paid never.

Most contracts should have explicit “stop work provisions” that explain consequences. Both the client and the contractor know what to expect when they violate terms.

The standard “Paid-When-Paid” and “Paid-If-Paid” clauses sometimes fall into this category. The courts usually find these clauses ambiguous and are unlikely to be enforced. Eleven states have banned “Paid-If-Paid,” but your contract can still decide when you get paid in all fifty states. If “when” is delayed indefinitely, a contractor might abandon a job until the client pays.

There are general laws for legal cases when there are no defined clauses or stop work provisions. But providing legal proof of overdue payment can be time-consuming. There is no guarantee if the court decides in the contractor’s favor that payment will be immediate.

Work Conditions

If there are hazardous conditions or contract conditions unmet, the contractor is responsible for notifying a client.

OSHA has clear guidelines about the right to refuse dangerous work. Unless staying on the job site is a safety risk, a worker should cease work but remain on the job site until the client resolves the hazard. If there are no attempts to make changes, a contractor might consider abandonment.

Consequences of Abandonment

To understand if it’s worth the risk, let’s discuss the three most significant consequences of what happens when a contractor abandons a job.

Lost Wages

The first obvious consequence of abandonment is the loss of wages. By intentionally leaving a project, a contractor forfeits the pay from any unfinished work. A contractor may take legal action for overdue payment, but a win is not guaranteed.

Reputation Damage

Whether it’s terrible reviews or cutting ties with a client, it can affect your ability to gain new leads. A contractor’s ability to market themselves is crucial to getting work.

If potential clients search your name and find you linked to abandoned projects or low reviews, you’re unlikely to be hired. By severing ties with a client, you’ve lost the chance to use their network to gain new leads. A contractor’s reputation is as important as their physical skills for employment.

Loss of License

Abandoned projects can affect more than the owners and contractors. Economic and public losses can also factor into consequences of abandonment. Some state licensing agencies can suspend or revoke a contractor’s license for abandoning a project. In such cases, a contractor must have a proven legal reason for their actions. Losing a license can severely restrict the jobs you can accept.

Alternatives to Abandonment

After reading about the consequences, you might wonder how you can avoid abandonment. There is no perfect safeguard, but here are some suggestions that might help.

Communication

It is crucial to establish communication. Whether it’s between a contractor and client, prime contractor and subcontractor, or another working relationship, you should have clear expectations.

When meeting a potential client, there are many points to discuss. You might not know everything from a first meeting, but you should understand a project’s needs. Knowing this can help you choose a low-risk client or project. Early and thorough communication before onboarding a new client is one way to prevent issues that can lead to abandonment.

Communication can stop a failing project from causing you or your client more harm.

Contract Abandonment

We explained mutual contract abandonment in a previous section. Unpredictable bumps in the road can change financial situations, schedules, or any other conditions that can interfere with both parties involved.

While a mutual contract abandonment isn’t always a happen end, it can be the least risky option. Communicating concerns can resolve disputes over revisions to a project’s scope or plans. If a schedule change is an issue, discussing a solution can prevent a contractor from losing a job or affecting a job’s quality. Sometimes a job can be saved, but sometimes there’s less risk to reputation or quality to abandon a project.

The Last Option

Abandonment should always be the last option. The decision comes with risk, and the rewards are unpredictable. It should never be a spur-of-the-moment choice. Consider the consequences and your reasons. There will be situations where the best option is abandonment, but those situations will be rare. Being a smart contractor means looking out for yourself, but it also means being smart about your contracts.


 

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