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Is your supplier a liability risk for your construction job?

Whether you fell into the construction trade after a summer job or you always loved using your hands to build, you now have the privilege of contributing to construction projects in Texas, either commercial or residential. Owning your own general contracting business has many positive elements, including the enormous gratification of completing a challenging project to the satisfaction of the project owner.

Unfortunately, you may also face conflicts and disputes with a project owner, particularly if the owner accuses you of using substandard materials for the project. Facing litigation for defects in your construction can be ruinous to the financial well-being of your business as well as your construction company's reputation. If you do face claims of using defective products, you may be able to share the liability with your supplier.

Who is your supplier?

Saving money, even a substantial amount of money, on substandard products for a construction project may lead to an even greater loss when the products fail and you must spend money defending your company against a lawsuit. It may seem prudent to spend less wherever you can, but you would not jeopardize your projects or your business by purchasing materials that will fail before their time.

More often, construction products come from overseas manufacturers in countries where the standards are not as high as those in the United States. Your best defense against accusations of using defective materials is to carefully vet your suppliers. Learn where they obtain their goods and whether they will stand behind the quality of the materials they supply to you. You would also benefit from knowing how your supplier will respond if the products are defective.

Is your contract solid?

You likely spend considerable time creating a contract for your subcontractors and others involved in your project. However, it is just as important to have a thorough contract with your materials supplier. If an element of the construction project fails after five or 10 years, you may still be liable, but you may not be able to share that liability with the supplier. Unless your contract stipulates otherwise, you may be bound by the statute of limitations in the Uniform Commercial Code, which is four years.

To avoid this, you may wish to use something more comprehensive than a general invoice for your suppliers. Additionally, your project contracts can include language that limits your liability for failed materials you used in good faith and prevents your supplier from shifting liability to you. Seeking advice from an attorney when you face these critical legal issues is a wise move for protecting your interests.

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Law Office of Tom Murphy
9600 Great Hills Trail
Suite 150 W
Austin, TX 78759

Phone: 512-774-6883
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