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How Contractual Agreements Can Affect Real Estate Claims

Disputes between a business or property owner and a contractor, or even between a general contractor and subcontractors, can derail construction projects and result in costs far exceeding estimations for construction or renovation projects. The Rhode Island Supreme Court recently ruled on an appeal to determine if an architect was entitled to contract damages for work that was never completed.

At the heart of this legal dispute lies a contractual agreement between an architectural firm and a restaurant. The restaurant hired an architectural firm to design a construction plan for renovating the restaurant property after a winter storm damaged the roof. The parties agreed that the plaintiff would prepare and deliver plans for the renovation, and the defendant made a partial payment toward the contract. According to the facts discussed in the opinion, the defendant stopped paying on the contract and abandoned their plan to use the plaintiff’s services to renovate the building. As a result, the plaintiff sued the defendant for the remaining balance due under the contract.

The court’s ruling centered on the existence of a binding contract, substantiated by a fixed lump-sum fee arrangement for architectural services. This arrangement mandated that the architect would receive predetermined compensation for his architectural work, disbursed in installments linked to specific project milestones. Regrettably, the defendant defaulted on their end of the deal, not only abandoning the contract but also discontinuing payments to the architect.

The restaurant, in an attempt to deflect liability, raised the argument of unjust enrichment – suggesting that the plaintiff had unfairly benefited without providing equitable compensation. However, the court swiftly dismissed this claim, emphasizing that unjust enrichment claims typically come into play when benefits are received without an existing contractual agreement. The existence of a binding contract in this case rendered the defendant’s counterclaim invalid.

The court’s ruling underscored the paramount importance of adhering to contractual obligations and the weighty consequences of material breach. The court deemed the defendant’s failure to meet payment obligations and the subsequent termination of the plaintiff’s services as a material breach of contract. The principle was clear – a material breach grants the non-breaching party the right to withhold their own contractual obligations.

This case serves as a poignant reminder of the importance of competent legal advice, as well as transparent and open communication between all stakeholders involved in construction projects. It serves as a stark lesson that unilateral actions such as contract termination must be meticulously documented and justified – especially when financial transactions are involved. This lesson carries particular relevance for parties seeking insurance claims related to construction ventures, as the court scrutinized whether the termination was warranted and if the party making the claim was genuinely enriched unjustly.

Addressing Questions Concerning Contractor Disputes in Rhode Island

If you or a loved one is experiencing a dispute with a construction company or subcontractor, you may need the help of legal counsel to resolve the situation to your benefit. The experienced Rhode Island property lawyers at Bilodeau Capalbo, LLP, can assist you. Our dedicated attorneys understand how property and contractual law are interrelated, and with our skilled representation, you can be confident that you will get the result that you deserve. Our lawyers represent people in Rhode Island in all types of property issues, including disputes with contractors and architects. If you have questions about a Rhode Island property law issue, we’re here to help. Call us at 401-300-4055 for a free consultation.


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