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No Contract; No Problem?

On smaller jobs, a contractor or subcontractor may agree to perform work without a formal written contract.  While it is best to have a written contract in place, in the real world, people don’t always take the time to prepare and sign such an agreement.

So what happens if the owner refuses to pay for work where there isn’t a written contract?  Does the absence of a written contract prevent the unpaid contractor or subcontractor from asserting a claim?

Generally speaking, under Maine law, the unpaid contractor or subcontractor will still have viable legal claims in pursuit of payment.  These claims may include:

  • Mechanics’ Lien: Under Maine law, anyone that furnishes labor or materials on a project with the owner’s consent will automatically have a lien (which secures payment for the labor or materials) on the real property where the project is located.  There are, of course, strict statutory requirements that must be met, which we have previously explained here, but a mechanics’ lien can be effectively used to secure payment even when there is no written contract.
  • Quantum Meruit: This latin term, roughly translated as “as much as deserved”, is essentially a claim that an implied contract exists allowing the contractor or subcontractor to recover the value of his or her services.  The contractor or subcontractor must prove that he or she expected to be paid for the work performed, and that the owner understood that payment would be required.  No formal written contract, however, is required to support this type of claim.
  • Unjust Enrichment: This equitable claim may be asserted where there is no contractual relationship between the parties.  As a matter of fairness and justice, the unpaid contractor or subcontractor may pursue the recovery of the value of his or her work from the owner.  Maine law imposes a duty to pay for any benefits inequitably retained by the owner.

There are good reasons why parties should insist on a written contract.  In fact, written contracts are generally required for residential construction (as we previously explained here), but sometimes real world considerations necessitate moving forward without a formal agreement.  The lack of such an agreement, however, does not always preclude an unpaid contractor or subcontractor from pursuing payment and asserting valid legal claims against the project owner.

Perkins Thompson regularly helps contractors, subcontractors and material suppliers pursue payment claims. If you would like to speak with the firm about a non-payment issue, you can send an e-mail to Joe Talbot or call him directly at 207-774-2635.