Categories
Contract Disputes

Oral contracts in Florida: Are they binding?

Updated: May 26th, 2017With the exception of contracts that are required to be in writing pursuant to Florida law – as listed below – oral agreements are binding and legally enforceable. However, just because an oral contract is enforceable does not make entering into one advisable or favorable. They're notoriously difficult to enforce, primarily because a party wishing to enforce an oral contract must first prove that it existed in the first place.

When attempting to prove the existence of an oral contract, the first question a Hollywood or Fort Lauderdale contract dispute lawyer will ask is this: Are the elements of a valid contract present? The elements of a valid contract, whether oral or written, are:

  • an offer;
  • acceptance of the offer;
  • sufficiently specific terms or a "meeting of the minds";
  • exchange of consideration

HELP YOUR LAWYER GATHER EVIDENCE

If you're trying to prove that an oral contract exists, you might begin by gathering evidence which may indicate the existence of the offer, acceptance of the offer, specific terms and exchange of consideration. Such evidence could include:

  • (a) written communications exchanged regarding the oral contract, like text messages, emails or handwritten notes
  • (b) proof of payment for goods or services, like canceled checks, pay slips, purchase orders or receipts
  • (c) testimony of any third parties present when the oral contract was formed
  • (d) proof of performance of terms of the oral contract

Assuming the party seeking to prove the existence of the oral contract has some of the above evidence, and that evidence is accepted as valid by a Ft Lauderdale court, that party's attorney must now endeavor to prove that there was a mutual understanding regarding the oral contract. It is common for two or more parties making a verbal agreement to have dramatically different perceptions of what was agreed upon. Without the agreement being reduced to writing, it is challenging to prove that any mutual understanding existed.

WHEN WON'T SPOKEN AGREEMENTS CUT IT?

Mutual understanding is critical in certain life-altering transactions. For this reason, Florida law reasonably requires that certain contracts must be in writing to be enforceable. Some examples of contracts that must be in writing are:

  • contracts regarding the buying and selling of real estate
  • contracts to pay someone else's debts
  • contracts for sales of goods greater than $500.00
  • leases that have a term which is greater than twelve (12) months

For the protection of all parties in a transaction, it is preferable to reduce contractual agreements to writing whenever possible. Qualified Ft Lauderdale / Hollywood contract dispute attorneys will make sure that all of the requisite elements are present in a written contract to make it enforceable in a court of law. In the event of a dispute, the written contract will always prevail over an oral agreement.

However, if a party has already entered into an oral contract and that oral contract has been breached, a qualified attorney can assist the party in determining whether the requisite elements exist to prove existence of the contract in court. It is possible to enforce an oral contract, but the likelihood of your lawyer's success will depend greatly on the facts of the case.

Categories
Lien Law

Two contracts; Two mechanic’s liens

Clients sometimes ask us whether they need to do two (2) separate mechanic's liens when they have two (2) small contracts on the same project in Fort Lauderdale or Hollywood. They call hoping that the answer will be that they can get away with one (1) lien. This is either because they did not do two (2) Notice to Owners, they do not want to have to file two (2) separate liens or they just want to avoid the cost and inconvenience associated with doing two (2) liens. The general rule is that your lien rights follow your contract rights.

As such, if your contract dispute involves an owner who you contract with to do certain improvements to his property and in the course of the construction he desires to have other work done on the same property and you have that formalized in the form of a second separate written agreement you (or your Fort Lauderdale contract lawyer) have an obligation to file two (2) liens rather than one (1). By the same regard if you are not dealing directly with the owner of the property you need to make sure that you do two (2) separate Notice to Owners as well as two (2) separate Claim of Liens in Broward County.

ENSURE THAT EACH CONTRACT HAS A CLEAR PURPOSE

Getting paid under both contracts typically involves providing partial Releases of Lien during the course of the project. The fact that there are two (2) separate contracts along with two (2) corresponding Notice to Owners will certainly complicate things further with regard to providing Releases. The simplest solution is to make reference to which contract the Release relates to. This can be done by assigning a contract number to each contract and making reference to that contract number in the Release. A more detailed analysis of Releases is a subject for a future article.

The bottom line is if one is working on a project under two (2) or more separate contracts each contract is treated separately with regard to one's lien rights and as a result, two (2) liens are needed. The good news is that if it is necessary to file suit, you can file suit on both liens under one lawsuit and at least minimize the expenses involved in litigation based on the fact that only one (1) lawsuit is necessary. The contents of this article may not be good news for many in the construction industry from a simplicity standpoint but it is better that you are aware of the facts and your rights under the law and deal with those complications during the course of the job rather than discovering you have lost your lien rights on a portion of the work done on a specific project.

Matters involving construction liens in Broward County can be complicated. Always seek the guidance of an experienced Hollywood or Fort Lauderdale construction lien attorney before filing or responding to a lawsuit.

Categories
Lien Law

Public property and lien rights

If you're working on public property in Florida, you usually have no lien rights. As a substitute to lien rights a payment bond may be available. However, sometimes there are still rights where one thought there might be none. If the work on the public property is a result of the orders of a private owner who is improving the neighboring property your lien rights could be safeguarded on that neighboring Fort Lauderdale property.

Often, before allowing a property owner to make subdivision improvements, the public authority may require that the owner make certain improvements to the underground utilities in the area or possibly to the street itself as well as other examples of improvements to the public property. The public body wants to make sure that it is following a reasonable land use plan and that there is enough water and sewer for the residents in the area or they may want to make sure that the streets are properly designed for the amount of traffic they will carry. As such, if one is working on the street, either making improvements to the street or working on water and sewer beneath the street, he may have lien rights on the abutting land.

Florida Statute 713.04, Subdivision Improvements, specifically notes that "when the services or materials are placed on land dedicated to public use and are furnished under contract with the owner of the abutting land, the cost of the services and materials, if unpaid, may be the basis for a construction lien upon the abutting land." What this means in plain language is if the construction going on is the result of the orders of the property owner neighboring where the construction is taking place, that private property owner's real estate may be subject to construction liens, and your construction lawyer has a good chance of securing payment on your behalf. The key to this section of law is that the improvements which are being constructed actually touch the land sought to be liened in Fort Lauderdale.

If the improvements do not actually touch the land sought to be liened, there are no lien rights. In Davis Water & Waste Industries, Inc. v. Embry Development Corp., 603 So.2d 1357 (Fla. 1st DCA 1992), the Court held that the lienor had no lien rights on the owner's property. In this case, the lienor was required to make certain improvements to a public sewer and water system, specifically, to increase the water pressure to certain fire hydrants within the subdivision. In that case the public property wherein the services and materials were furnished was separated from the owner's land by intervening property. The public property in question did not touch or border or otherwise reach out or abut the landowner's property. The Court found that the Statute clearly requires that the public land upon which the improvements are constructed actually touch the land sought to be liened. It went on to note that the lien statute must be strictly construed, Davis at 1359. This requirement that the public property actually touch the landowner's property may be a rigid restraint on lien rights because the work might qualify in all other respects except for the fact that it does not actually touch the private owner's property. However, at least there are lien rights in those cases where the public works improvements do touch the private owner's property.

In conclusion, when it comes to construction liens in Fort Lauderdale, have your lawyer examine all the circumstances. This blog might be better entitled "Lien Rights From Heaven, a/k/a Gifts From Below" since this section of mechanic's lien laws often deals with underground work. When in doubt of lien rights, follow this simple rule: Don't automatically assume that you have them! Always check with a knowledgeable attorney to ensure that your best interests are protected.

Categories
Lien Law

Foreclosing on Smaller Liens

Lienors are now able to foreclose on mechanic's liens under $15,000. Broward County Court may provide a more amicable, quicker and less expensive forum than Circuit Court for liens under $15,000. In the past, foreclosing on smaller construction liens in the Fort Lauderdale area ($10,000 to $15,000 depending on the timeframe) involved the process of filing suit in circuit court. Hollywood's Circuit Court had exclusive original jurisdiction on all lien foreclosure actions without regard to the amount in controversy. Filing in Circuit Court on these smaller lien amounts had its drawbacks, namely it was more time consuming for your Broward County construction lien lawyer, making it more expensive. It also could also entail some judges' wrath./

CURRENT LAWS TAKE PRESSURE OFF JUDGES

As noted, Circuit Courts had exclusive jurisdiction in all lien actions. As such, some judges feeling the pressure of having too many cases to handle on their docket would express displeasure to Plaintiffs over the Plaintiff's filing their lawsuit in Circuit Court when the amount in controversy was under the dollar amount with which these Judges typically deal. County Court's jurisdiction goes up to $15,000, Circuit Court's jurisdiction starts at $15,000. Plaintiffs would often desire to file suit on their liens because the construction lien law provides for attorney's fees, gives the lienor another defendant to attempt to collect its money from, namely the owner, and if a defendant does not pay a Judgment, the Plaintiff can foreclose the property in order to satisfy their lien. However, due to changes made by our legislature, Circuit Court apparently no longer has exclusive jurisdiction over lien actions. Under present law, Broward County  courts may hear all matters in equity involving any case within their jurisdictional amount (up to $15,000). Before the enactment of this law, lienors had no choice but to file their action in Circuit Court. However, because actions are considered equitable in nature, County Courts now have jurisdiction over actions under $15,000.

The net result is that many Fort Lauderdale construction lien lawyers are now filing suit on cases under $15,000 in County Court. Many lienors in the past may have hesitated to file suit on liens under $10,000 or $15,000 because Circuit Court was not a friendly forum for them to go to due to the timeframe involved as well as the expense. However, now lienors can file suit in Broward County courts which takes less time to get to trial and is less expensive and as such provides a friendlier forum to bring these actions.

Sources

  • Florida Statute 26.012(2)(c) and (g)
  • Florida Statute 34.01(4), 1991
  • Corbin Well Pump & Supply, Inc. v. Koon, 482 So.2d 525 (Fla. 5th DCA 1986)
Categories
Lien Law

Don’t assume you have lien rights

Today's construction projects have become more treacherous, requiring suppliers and subcontractors performing on them to be more careful in determining what their position is in relation to the owner and general contractor. This elevated level of caution from their Fort Lauderdale attorneys helps them ensure that they protect their rights on construction and mechanic's liens.

Florida law, Section 713.01 defines a 'lienor' as "(a) contractor; (b) subcontractor; (c) subsubcontractor (d) laborer; (e) materialman who contracts with the owner, contractor, subcontractor, subsubcontractor; or (f) professional lienor under Section 713.03; ..."

This Section goes on to state that no person shall have a lien under Part 1, except those specified in this subsection. In order to determine whether or not your company is a "lienor" as defined by statute, it is necessary to know who the parties are and what their role is in the chain between your company and the owner.

The key to determining what your position may be in relation to the owner is determined by what role the person or company with whom you have a contract has. A company other than a material man or laborer, who finds itself performing a portion of a subsubcontractor's contract will not have lien rights against the real property pursuant to Section 713. Likewise, if you work for a material man, someone supplying materials only, you have no lien rights.

The most obvious place to begin determining what your position may be in relation to the owner is with a Notice of Commencement. If such a Notice exists, it will indicate not only the owner, but the general contractor as defined in the statute as well. Once you determine what your position is with relation to the general contractor, you may find you don't want to do the job because you have no lien rights. The next important place to look is at your customer. You need to know your customer's position in the chain and what their role is. Confirm who their contract is with and establish what if any contracts and companies exist in the chain between them and the owner.

The important thing is to not assume you have lien rights. Know where you are in the chain in relation to the owner and know what role your customer is in. Know your rights under Florida's Proper Payment Act. It is also important you always do a Notice to Owner on every project.

The Notice To Owner tells the Owner you are on the job and they need a Final Release before they pay the Contractor in full. Additionally, many Owners demand a Final Release from everyone who serves a Notice To Owner before they make their final payment. Often, Owners don't want to have to figure out who has lien rights and who does not, so they require a Final Release from everyone they know about to play it safe. It is also important you serve your Notice to Owner as early as possible. Many lienors wait until they know they are having a payment problem before they do a Notice To Owner, when it's too late. The sooner your construction litigation lawyer helps you with a Notice to Owner, the better the chance someone above you in the chain will make sure you get paid so you don't lien the job.

Lien laws are not black and white on when you have to do a Notice To Owner, so the best option is use the earliest deadline and have your Notice to Owner served on the Owner within 40 days of your first day on the job.

Categories
Lien Law

Liens and the Proper Payment Act in Broward County

Despite the myriad of pitfalls and obstacles created by Florida's Legislature designed to protect Broward County lienors in their claims against the owners and their right to attorney's fees should they prevail on a lien foreclosure action, there remains a bastion or safe haven for the owner in the rubric of the "proper payment" defense. If you're a property owner facing a lawsuit against a construction company, contractor or subcontractor, a lawyer specializing in construction liens can assess the unique circumstances of your suit, then suggest the option that gives best chance of winning your case in Fort Lauderdale and Hollywood.

The fear that all mechanic's liens are ultimately proper and enforceable when placed by an innocent subcontractor, sub-subcontractor or supplier who has legitimately not been paid by its direct contractor, may be assuaged by what is referred to in Florida §713.06 as a "proper payment" defense. Florida courts and legislatures through the enactment of Florida §713 entitled "Construction Liens," have provided the owner this viable means for protection from liens placed on their property and actions to foreclose thereon.

The Florida legislature has, through a very intricate process, set forth a cumbersome and tricky path for the owner to follow throughout the project in question to ensure that all payments and parties are properly paid. When all the proverbial "t's" are crossed and "i's" dotted, the owner very likely will be spared the additional burden of paying out twice to a lienholder, where the owner has already paid this money once to the general contractor with whom they have a direct contract.

The overall framework with which the owner needs to be aware, in a very general sense, is that all payments are to be made to the general contractor under the terms of their direct contract including change orders, while each and every potential lienor who has properly and timely given Notices to Owner must provide releases of lien in exchange for each payment made by the owner to the general contractor. Additionally, and most importantly, when the "final payment" becomes due, the owner must have received from the direct contractor an "affidavit" setting forth the fact that "all lienors under his direct contract have been paid in full or, if the fact be otherwise, showing the name of each lienor who has not been paid in full and the amount due each for labor, services or materials furnished." The responsibility lies with the general contractor to provide the affidavit, and the owner has a right to rely on its contents. The owner may also pay directly to those lienors who have given notice whether or not listed in the contractors affidavit. However, the owner has the choice to pay either general contractor or the lienor.

IT'S A COMPLICATED PROCESS IN BROWARD COUNTY

Ultimately, the owner will be absolved of any responsibility beyond the limits of his direct contract, where all of the foregoing have occurred and all monies due under the owner's contract have been paid. There are considerable details regarding time limitations and other procedural requirements beyond the scope of this article which must be followed by lienors, contractors and owners concerning Notices to Owner, filing Claims of Lien, proper forms of affidavits and so forth. To that end anyone involving themselves in the construction litigation process should become thoroughly familiar with any and all such requirements with the help and advice of licensed mechanic's law attorney in Hollywood or Fort Lauderdale, as this article alone provides merely a general overview.

The "proper payment" defense has been addressed by the Supreme Court of Florida in Richard Store Company vs Florida Bridge & Iron, Inc., 77 So.2d 632 (Fla. 1954). The facts of that case were that a sub-subcontractor was not paid by his subcontractor, consequently the sub-subcontractor recorded a lien and attempted to foreclose on the owner's property. However, the owner had paid out the full amount of its contract with the general contractor. In citing other Florida case law as authority, the Supreme Court stated that by properly paying the money due on the direct contract, the owner can avoid having any mechanic's lien enforced against his property in Fort Lauderdale. The rationale of the court was one of logic, wherein they claimed that the law would have an illogical outcome were it to impose such a burden on the owner, to in effect require the owner pay twice for a sub-subcontractor with whom the owner was not in privity.

FLORIDA SUPREME COURT SIDES WITH THE OWNER

The Supreme Court again revisited the issue in. Alton Towers, Inc. vs Coplan Pipe & Supply Co., Inc., 262 So.2d 671 (Fla. 1972), wherein they explained that it was the legislative intent that the owner be protected from requiring him to pay more for his improvements than called for in his contract. The lienor is equally protected by Florida 713, however, only insofar as funds under the contract are properly available for that purpose. Further, the court provided its reasoning by quoting C. Bryan vs Owsley Lumber Company, 201 So.2d 246 (Fla 1st DCA 1967), which held that such a concept is premised on the equitable maxim that where one of two innocent persons must suffer as a result of the default of the other, the loss shall fall on him whose act made the loss possible, in that case the sub-subcontractor.

One important caveat of which the owner must be aware, is that where there is no agreed total contract price between the general contractor and the owner, then there is no limit, except for actual value, to the amount of liens that are properly acquired pursuant to the general contract to impose the realty.

Ultimately, the owner may not be responsible under a lien theory, however, there may still remain liability under other theories such as unjust enrichment, although attorney's fees would not be awardable under that cause of action. Of course, there are remedies available to the lienor who has not been paid, but such remedies may be for such actions as breach of contract, open account or account stated against the party with whom they are in direct privity, not the owner.

CONCLUSION

As an owner, you should always be cognizant of following the "proper payment" steps prior to the completion of a project. Be sure to preserve this defense when and if the unfortunate, but often too common experience arises when a lienholder from whom you have never heard, suddenly files a suit to foreclose when you were otherwise confidently off to commence your next project, thinking you have paid all that is required under your construction contract. Always consult with a skilled Broward construction lien lawyer before taking any action. Attorney David S. Tupler offers free consultations over the phone or at his Hollywood or Fort Lauderdale offices.

Categories
Contract Disputes

The dangers of compact contracts

All businesses in all industries enter into contracts at some point, and construction companies in Fort Lauderdale and Hollywood are no exception. While many business contracts are simple, like an agreement to deliver a product on a specific day, construction contracts usually are far more tricky, and need an attorney's review.

WHAT IS A CONTRACTUAL AGREEMENT?

A contract is a legally binding document that lays out specific terms for a service to be performed. For a contract to be legal, all parties must receive something that is beneficial to each party’s business. For example, a construction company agrees to renovate a building. One party will benefit from the renovation while the construction company will benefit from being paid for its services.

WHAT IS A COMPOUND CONTRACT?

While not an official legal term, "compound contract" is a common term used in reference to contracts used in the construction industry. These contracts are designed to "simplify" contracts that often are used when a bidding process is in place for a construction project. Often designed to be a single-side bid form, compound contracts are much more complicated than they seem.

BEWARE OF THE TERMS AND CONDITIONS

While a compound contract appears to be simplistic, the problem often lies in the “terms and conditions.” Most simplified contracts have very casual references to their terms and conditions. These often are a mishmash of phrases taken from similar contracts or referencing different government terms and conditions. If the contractor does not have all related addendums attached to the contract, expensive legal issues are likely down the road.

A compound contract can be very confusing once you start deciphering the small print. In fact, it is not uncommon to find major contradictions in the terms and conditions of a single contract. The best way to manage risk for this type of contract is to let a commercial litigation attorney review it before you sign.

UNDERSTAND ALL TERMS BEFORE BIDDING

When bidding on any type of project, make sure that you are familiar with all aspects of the contract, including how legal issues will be handled in the future. Many contractors find themselves in shock when they are sued for “poor performance” a decade after a contract is finished, only to find themselves in mediation instead of in a courtroom. Sadly, the fine print in their compound contract gave the purchaser of their services these rights.

Make sure that you carefully review any warranties or guarantees that you are expected to offer as a contractor, and for what period of time. You will need to verify whether you are required to place a bond on the job prior to starting, and establishing payment protocol is a must. You also will need to check if there are employee status requirements for your workers, paperwork requirements in addition to your standard billing method, or requirements to prove that employment taxes have been filed. Each of these conditions may be found (or referenced) in the small print.

A contract – compound or regular – is a legally binding document that can be enforceable in court. A judge will never accept an allegation that you were not aware of the terms of the contract prior to signing the agreement. Always know what is contained in any contract that you are signing, and let a Fort Lauderdale contract dispute lawyer from David S. Tupler, P.A. handle your commercial disputes, giving you the best chance of a favorable outcome.

Categories
Lien Law

How to protect your lien rights

Florida's Mechanic's Lien Law requires that those paying money and those receiving money should designate and should inquire, respectively, where the money is to be applied. Failure to do so can result in loss of lien rights.

Specifically, Florida Statute 713.14 deals with designation of money to material accounts when there is a running account or multiple contracts. Subsection 1 requires that an owner, contractor, subcontractor or subsubcontractor when making payments to designate the contract or items of account to which the money is to be applied. Subsection 2 requires that when any materialman, subcontractor or subsubcontractor receives a payment for materials, a demand must be made upon the party which is making the payment for designation of the account and also a designation of the items of the account to which the payment should be applied. If you do not request a designation, your construction lien rights could be lost to the lienor, according to David S. Tupler, a Fort Lauderdale-based attorney who sepcializes in liens.

The focus of this article will be on subsection 2 which deals with the duty placed on subcontractors, subsubcontractors and material suppliers to demand a designation of account for materials supplied on a project. If a demand is made but no response is forthcoming, the lienor can apply the money as they see fit unless they have knowledge of the source and its intended purpose. If the party making the payment makes a designation of account which is incorrect and the potential lienor is aware of this error, they are still under a duty to make the proper credit to the account and thus protect the owner's property from improper liens. Florida Statute 713.14 provides no specific form and does not specifically state that the demand must be in writing. Obviously, the better practice would be to make the demand for designation of account in writing and to send it by USPS Certified Mail to the party that made the payment. Although no specific form is required pursuant to the statute, it is suggested that any written request should contain the following information:

REQUEST FOR DESIGNATION OF ACCOUNT TO CREDIT PAYMENT

Thank you for your check no._____, dated __________________, in the amount of ________________. Pursuant to Section 713.14 of the Florida Statutes we are required to request a designation of the account and the items of that account to which the payment is to be credited. Please notify us as to which job and the specific invoices to which the payment should be applied.

The purpose of Florida Statute 713.14(2) is to protect the owners and others from diversion of payments to other accounts or debts, and to avoid subjecting the owners' property to mechanic's lien when the owner has made a payment which has been passed on to the lienor. Always err on the side of caution, and never assume that you have lien rights.

This blog is not intended as a complete review or summary of Florida Statute 713.14 but only as a general overview of what the Florida statute requires and what its intended purpose was.

Note: An attorney specializing in construction law can help you understand related construction laws, specific to Hollywood and Fort Lauderdale courts.