#58: Gathering Evidence for Proving or Defending a Contract Claim
If you are in the construction game long enough, sooner or later you are bound to get into a dispute over money allegedly owed under your contract, whether to you or by you. The issue could be as simple as whether proper performance of an agreed scope of work has occurred, or as complicated as whether a differing site condition has been encountered. Whatever the dispute, both the party seeking payment and the party defending against it should anticipate that it may ultimately land in the lap of an arbitrator, a judge or a jury. And before you lawyer up, you need to paper up.
Document management may be a pain, but the simple truth is that documents – paper or electronic – win cases. Contemporaneous records are the best evidence of what happened months or even years before the matter reaches trial. Documents are viewed as more trustworthy than witness testimony (even when the witness is also the author!) if for no other reason than the fact that the strongest memory is weaker than the palest ink.
Projects of any appreciable size naturally generate written records of various types, whether required by the contract or not, simply to effectively manage the project. A typical project file will include daily reports, correspondence (often by email these days), meeting minutes, internal memoranda, RFIs and responses thereto, change order requests, shop drawings and submittals, revisions to plans/specs/schedules, job photos or videos, and of course requisitions for payment with appropriate back-up. Keeping them properly will improve your chances of prevailing on or against a claim.
The first and most obvious task is getting the right details documented. This goes far beyond collecting a signature from the owner's rep or the contractor's superintendent before embarking on a new task (which your contract may well require as a prerequisite to any price or time adjustment). A daily report that only recites the personnel and equipment on site, the portion of the job being worked on and the weather is less useful than one which notes any problems encountered or discussions surrounding them. A change order request which does no more than mention the aspect of the work that required additional effort is less useful than one which quotes chapter and verse from the plans and specs, includes a sketch or a photo, and compares in narrative form the initial plan of attack with the means and methods employed after the changed condition.
Timely documentation is the next most important consideration, as a writing cannot qualify as a “business record” admissible in court unless it was made “at or near the time” of the event it describes. If a verbal discussion includes a directive or a clarification that might involve extra time or money, it should be followed up with prompt confirming correspondence or with an accurate meeting minute. If a schedule is impacted by an added or deleted task or by a loss of productivity on an existing task, the schedule needs to be adjusted quickly. With men, materials and machinery moving around all the time, a job site photo taken tomorrow may not show precisely the same conditions as one taken today. No matter how pressed for time you are in the heat of battle, try not to let the sun set on an undocumented occurrence that may have financial consequences down the road. The longer you wait, the more of an afterthought it will look like, making your documentation appear far less indicative of a serious concern. No one is likely to be impressed with a “Well, I was too busy” excuse at trial, even if it is true.
Lastly, for any issue that may spawn a money fight down the road, prepare a separate “claims file” right away, into which copies of all of the foregoing documentation can be placed on a regular basis. This is far more efficient than trying to comb through thousands of pages for relevant information at the point of “going legal.” Why incur dozens of extra hours to separate the wheat from the chaff for your lawyer – or, God forbid, by your lawyer – down the road?