Businesses engaged in contracts with other companies sometimes have a dispute over the terms or performance of a contract provision. There are certain types of contract provisions that are prohibited in the state, and as such, hold no legal weight if they appear in a construction contract.
Construction contract provisions that purport to waive rights to litigate disputes in court are generally void, although an agreement to enter into arbitration prior to the initiation of legal proceedings is valid. Similarly, provisions that purport to waive rights to subrogation for losses or claims paid under workers’ compensation are also generally void and thus legally unenforceable.
Contracts are to specify that all payments due to a contractor except retainage must be made within 30 days after the owner receives an invoice for an undisputed payment. Owners who fail to make the undisputed payment within 30 days are to pay interest to the contractor in the amount of 18 percent per annum. Contractors are supposed to pay their subcontractors within seven days after receiving the payment from the owner. When a contractor fails to do this, the contractor will be required to pay the owed subcontractor interest at a rate of 18 percent per annum calculated beginning on the eighth day.
Contract disputes are often a part of the cost of doing business in the construction field. Disputes sometimes arise over the timeliness of work, the quality of work and payment for work that has been completed. It is important for businesses entering into a construction contract to make certain their agreement is legally enforceable and legally correct in order to protect their rights under the law. An unenforceable contract does not serve the contracting parties in any way.
Source: Kansas Statutes, “Article 18: Kansas Fairness In Private Construction Contract Act“, November 11, 2014