5.3.1.3.1 Types

• Jurisdiction: Arizona

Owners faced with allegedly severe contractor-caused problems, and prime contractors faced with allegedly severe subcontractor-caused problems, sometimes go through the process of terminating the defaulting contractor without fully appreciating the legal consequences that might arise from this termination. This is not an infrequent scenario on construction projects suffering from construction delays. It is true that if the contract is terminated for legally proper reasons, the owner may generally recover all excess costs and incidental damages incurred in engaging a new contractor to complete the project.^[67] However, owners often fail to realize that significant factual and legal issues may exist as to whether the allegedly defaulting contractor is in material breach of the contract, as opposed to a lesser...