Construction Claim Rejected? Step 2: Anticipate your client’s response

You will recall from our last article here that we are outlining the steps you can take to fully understand your rejected construction claim and your commercial position.

These 3 steps are:

1. Understand your construction claim and commercial position;
2. Understand your client’s argument and commercial position; and
3. Choose the right combination of claim recovery options.

In Part 2 of this series, we will seek to step into your client’s shoes and anticipate how they might approach their defence to your claim. This step is important as it will enable you to make an early assessment of your prospects of recovery.

Client’s arguments: First of all, ask yourself, what legal arguments will they raise? Will they say your variations are works within the agreed scope? That you are time barred? That your claim is offset by liquidated damages? That your works are defective? Or another reason? Are the client’s arguments strong? How will you respond to these arguments? Hopefully, you should already have a strong understanding of the contract, as discussed here.

Factual disputes: Next, consider the factual issues in dispute. Will they dispute the factual assertions underpinning your claim? If yes, how so? Compare the strength of the documents and witnesses in support of your position as against your client’s position.

Client’s financials: Now consider the impact of your client’s financial position. Will they have the money to pay your claim? Are they backed by assets? Are they attempting to dissipate assets from their company or possibly enter voluntary administration? How will this change your approach to the claim?

Client’s record: You must also consider your client’s past record in similar situations. How have they previously responded when similar claims have been made against them? Consider whether you need to adjust your claim strategy in light of this.

Security:
Do they hold retention or bank guarantees? Are they likely to use any of their arguments as a basis for having recourse to your retention or bank guarantee? What does the contract say on this issue? Is the client likely to call upon your retention despite what the contact says?

Personalities: Don’t forget the part that individual personalities will play. Consider the individuals involved from the client. Are they reasonable? Or are they the type that will defend a weak position in order to save face? How will you respond to that scenario? If the dispute gets escalated within the client’s company, will that improve or weaken your prospects of resolving the matter commercially?

Now you know and understand your arguments and financial position, as well as your client’s. Digest all this information before deciding upon which combination of claim recovery options you will choose. We will look into this issue in part 3 of this series.

In the meantime, let us know your views. Have you had a construction claim rejected? How did you get to know your client’s claim? Did you take any additional steps not listed above?

We welcome your comments.