Dar Es Salaam Port Harbour
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Volatile U.S. tariff announcements continue to affect international supply chains for U.S. construction projects. Although recent litigation has centered on the scope of presidential tariff authority rather than construction‑specific disputes, these decisions carry important implications for how parties structure risk in their contracts. In May 2025, the U.S. Court of International Trade (CIT) struck down certain “Liberation Day” tariffs as exceeding presidential authority under IEEPA. A federal district court in Washington, D.C. likewise issued a preliminary injunction suspending related tariffs—though it later stayed its own order pending appeal. And the Supreme Court has agreed to review cases addressing the legal limits of IEEPA‑based tariffs.

While none of these developments arises from construction disputes, the themes they highlight—timing, statutory authority, and documentation—mirror the issues encountered when tariff conditions disrupt international procurement. The following strategies reflect practical steps U.S. project owners, contractors, and foreign suppliers can take to mitigate risk, drawing on drafting approaches now widely used across major construction forms, including—but not limited to—modified AIA agreements.

1. Strengthen Contract Provisions to Manage Tariff‑Driven Cost Escalation

Clarify Escalation and Cost‑Sharing Models

Many construction contracts include capped risk‑sharing structures to address material cost volatility. Contractors typically absorb cost increases up to a negotiated threshold—often 10–15%—after which owners share or assume the excess, subject to notice and documentation requirements. This remains one of the most balanced approaches to addressing tariff unpredictability.

Contracts also increasingly include pricing trigger ranges (commonly ±5–10%) requiring the parties to reassess pricing when material costs shift beyond agreed bands.

Use Precise, Timing‑Based Tariff Definitions

Construction contracts must also take into account tariff effective dates, specifying that tariff‑related relief applies only to tariffs enacted after the contract’s effective date.

Balance Escalation With Savings Provisions

Because some tariffs have been suspended or stayed pending appeal, well‑drafted contracts now include savings provisions requiring parties to share decreases in cost when tariff‑related prices fall. This symmetry promotes fairness and reduces disputes as markets stabilize.

2. Refine Risk Allocation Across Interlocking Contract Clauses

Tariff‑related risk is typically spread across multiple provisions—not just escalation clauses.

Guaranteed Maximum Price (GMP) Contingency Language

On GMP projects, contractors often negotiate the right to use contingency funds for tariff‑related cost increases. Owners typically limit such use to non‑contractor‑caused events. Clear drafting reduces later disagreement over whether contingency use was appropriate.

Buyout and Price‑Hold Requirements

Volatile tariff timing has led some subcontractors to resist long price‑hold periods. Contracts should address how design development, delayed notices to proceed, or owner‑driven sequencing changes affect suppliers’ pricing obligations.

Tailored Delay Provisions

Tariff‑driven procurement delays may be treated as excusable (but not necessarily compensable). Expressly identifying tariff‑related disruptions as potential causes of excusable delay promotes clarity without overreliance on force‑majeure provisions—which courts interpret narrowly.

3. Mitigate Procurement Exposure Through Early Planning and Supplier Engagement

International commentary notes that sudden tariff changes can significantly disrupt supply chains, especially in industries dependent on imported steel, aluminum, and specialty components. For construction projects with cross‑border material dependencies, the following steps can reduce exposure:

  • Early procurement or hedging to secure pricing before tariff changes.
  • Alternative or parallel sourcing to diversify suppliers in non‑impacted regions.
  • Structured supplier communication protocols to ensure early notice of tariff developments.
  • Rolling procurement schedules that help isolate tariff‑related impacts before full buyout.

4. Strengthen Documentation and Notice Practices

Tariff‑related litigation underscores the importance of detailed, contemporaneous records. Construction participants can adopt documentation discipline through:

  • Procurement records showing when quotes were obtained and how tariff timing affected pricing.
  • Supplier correspondence linking cost or schedule impacts to specific tariff enactments.
  • Documentation of mitigation efforts, including alternative sourcing and expedited procurement.
  • Separate cost‑tracking for tariff‑driven impacts versus general market inflation.

5. Incorporate Flexible Contractual Tools to Address Tariff Volatility

While tariffs may trigger broader cross‑border commercial disputes, construction stakeholders can still manage volatility by proactively incorporating flexible and well‑structured contractual tools, such as:

  • Predefined cost‑sharing thresholds tied to tariff‑driven cost increases.
  • Conditional pricing adjustments triggered by new or rescinded tariff actions.
  • Re‑pricing or termination rights in extreme circumstances.
  • Structured review procedures to evaluate tariff impacts collaboratively.

These tools help project participants respond to tariff changes constructively and maintain project momentum.

Conclusion

As courts continue evaluating the legality of recent U.S. tariff actions, construction stakeholders can seek to mitigate the risk of the politically weaponized tariffs through carefully coordinated contract drafting, proactive procurement planning, and robust documentation. By updating contract provisions to address tariff timing, escalation, savings, contingencies, and procurement delays, owners, contractors, and suppliers can manage politically driven tariff volatility with greater confidence and stability.

Building Site
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By April 18, 2026, New York construction litigation will operate on a faster—and far less forgiving—timeline. The Avoiding Vexatious Overuse of Impleading to Delay (the “AVOID Act”), signed into law on December 19, 2025, fundamentally rewrites third‑party practice under CPLR § 1007 by imposing strict deadlines to bring subcontractors, suppliers, and other responsible parties into a case.

For owners, developers, general contractors, and their in‑house counsel, this change will shift risk assessment, contract enforcement, and litigation strategy to the very front end of a claim—particularly in New York Labor Law and construction defect cases.

What Changed—and Why It Matters to Construction Cases

Historically, New York defendants could implead subcontractors and other players well into discovery. The AVOID Act ends that practice.

Under the amended CPLR § 1007:

  • Contract‑based indemnity claims must generally be brought within 60 days after the defendant serves its answer.
  • Non‑contractual claims (e.g., contribution or common‑law indemnity) must be asserted within 60 days of “becoming aware” that another party may be responsible.
  • Subsequent layers of third‑party practice are subject to even shorter deadlines (45, 30, and then 20 days).
  • No impleader is permitted after the filing of a Note of Issue, and late third‑party actions must be severed or dismissed and may not be re‑consolidated with the main action.

In construction litigation—where multiple trades, layered contracts, and overlapping insurance programs are the norm—these deadlines dramatically compress the window for action, and companies can no longer wait for discovery to unfold to identify other potential parties.

Owners and contractors will need to:

  • Identify all potentially responsible subcontractors and vendors immediately upon receipt of a complaint.
  • Analyze indemnification, additional insured, and defense provisions before filing an answer.
  • Make early determinations about whether contractual or common‑law rights support impleader.

Failure to act quickly may result in permanent loss of indemnity and contribution claims in the same action, forcing parties to pursue separate lawsuits—often without the leverage or efficiency that joint discovery and trial once provided.

Increased Motion Practice—and New Pressure on Early Investigation

While the statute is framed as an anti‑delay measure, there is concern that it will generate new forms of litigation activity.

The Act’s “becoming aware” standard—triggering the 60‑day clock for non‑contractual claims—will almost certainly become a battleground. Expect disputes over:

  • Whether RFIs, contracts, accident reports, or site logs should have triggered awareness;
  • Whether prior tenders or insurance correspondence constituted notice;
  • Whether early investigative steps were “reasonable” under project‑specific circumstances.

For project teams this means earlier site investigations, faster incident reconstruction, and closer coordination between legal, safety, and project management teams than ever before.

Strategic Impacts on Labor Law and High‑Exposure Claims

The AVOID Act may have its largest impact in New York Labor Law §§ 200, 240(1), and 241(6) cases, where defendants routinely rely on aggressive third‑party practice to shift liability downstream.

Because the Act limits impleader timing—but not plaintiffs’ ability to control the case—it may:

  • Increase settlement leverage for plaintiffs, who can time the Note of Issue to cut off third‑party claims;
  • Push defendants toward earlier global resolution, before indemnity rights are forfeited;
  • Force owners and contractors to rely more heavily on insurance tender and coverage litigation, rather than third‑party contribution claims in the underlying action.

Practical Takeaways for In‑House Counsel and Executives

The AVOID Act is not just a procedural tweak—it is a business risk issue. Companies operating in New York should consider:

  1. Updating incident‑response playbooks to ensure legal review begins immediately after any serious accident.
  2. Re‑evaluating contract management systems so indemnity and insurance provisions can be identified within days, not months.
  3. Training project teams to flag potential third‑party exposure early, before litigation deadlines close.
  4. Adjusting reserve strategies, recognizing that missed impleader deadlines may shift costs permanently onto the prime defendant.

The Bottom Line

The era of leisurely, discovery‑driven third‑party practice in New York is over. New York’s AVOID Act forces construction defendants to act early—investigating promptly, litigating decisively, and locking in risk‑transfer strategies at the outset of a case. For prepared defendants, the result may be leaner, more efficient litigation. For everyone else, delay now carries a steep price: the permanent loss of critical claims.

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Retention has long been a contentious issue in California construction. Traditionally, owners withheld retention of 10% from each progress payment until completion, arguing it was necessary to ensure performance, quality and timely delivery. Contractors and subcontractors, however, often struggled with cash flow, payroll, and material costs while waiting months—sometimes even years—for withheld retention.

Recognizing the financial challenges contractors and subcontractors face, the California legislature passed Senate Bill 61 (“SB 61”), now codified under California Civil Code Section 8811 and effective January 1, 2026, limiting retention to 5% on private works of improvement, aligning with the public works standard in place since 2012. The law’s intent is clear—ease financial strain on contractors and subcontractors while still providing owners with security (albeit reduced) with respect to project completion.

Section 8811 does not apply universally to all private projects. There are several, limited exceptions set forth in the statute:

  • Not Retroactive: Section 8811 only applies to private works contracts entered into on or after January 1, 2026.
  • Small Residential Projects: Section 8811 does not apply to small residential projects, provided the residential project is under four stories and does not constitute a mixed-use project.
  • Subcontractor’s Failure to Provide Performance and Payment Bond: Section 8811 does not apply to a contractor or a subcontractor if, prior to or at the time of a request for a bid, written notice is provided that a performance and payment bond is required and the subcontractor subsequently fails to provide said bonds from an admitted surety in California.

Section 8811 also provides that the retention percentage under any subcontract must match the retention percentage under the prime contract. Moreover, in an action to enforce the requirements of 8811, the courts are required to award attorneys’ fees to the prevailing party. 

For owners and contractors concerned about a contractor’s or subcontractor’s financial ability to properly and timely complete their work, other protections are available to offset the risk of reduced retention, though at an added cost to the project. The most obvious of which is the use of performance and payment bonds. Other less costly options may include, for instance, strengthening and/or broadening withholding provisions, default and step-in rights and warranty provisions under your construction agreements.  

SB 61 is a landmark change for California’s private construction industry. For clients, the takeaway is clear: plan now, negotiate carefully, and align contracts with this new law in 2026.

On Friday, February 20, 2026, Brenda Radmacher and Jay Houghton will present a live webinar to the Beverly Hills Bar Association (BHBA). Their presentation, “SB 440 and the Fair Payment Act: What Construction Lawyers Need to Know for 2026,” is based on their recent Daily Journal article and will explore key developments under SB 440 and the Fair Payment Act, with a focus on how these changes will impact construction lawyers, payment disputes, and compliance considerations in the year ahead.

The program is presented by BHBA’s Construction Law section, that provides a specialized forum for attorneys to network and gain insights into the complexities of construction-related legal issues. The session is approved for 1.0 hour of General MCLE credit in California, with reciprocity available in Alaska, Hawaii, North Dakota, Connecticut, New York, and Vermont. Attorneys may also be eligible to self-apply for MCLE credit in additional jurisdictions.

Register Here

The city of angels under construction
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The Daily Journal published an article on December 11, 2025 by Brenda Radmacher and Jay Houghton: “How California’s Fair Payment Act will reshape construction disputes in 2026.” The piece discusses California’s new Private Works Change Order Fair Payment Act, which will apply to private construction contracts entered into on or after Jan. 1, 2026.

Radmacher and Houghton detail why the act matters, what it covers, and its enforcement related provisions and subcontractor protections. They offer insights on how contractors and owners can prepare for the new law.

“The Fair Payment Act will have a significant impact on how private construction projects proceed when payment- and time-related disputes arise. The more prepared you are for these changes, the more effectively you can utilize the provisions and protect against the adverse impacts of any missteps.”

The full article is available here.

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One of the earliest issues to decide on a hospitality renovation abroad – whether it’s a branded resort in Europe, a hotel in Asia, or a mixed-use property in Latin America – is the selection of the appropriate project contracts.  The design and construction contracts in wide use in the US are sometimes appropriate for adaptation for use abroad.

This was the focus of our recent webinar, Adapting Standard Construction Forms for Use in Overseas Hospitality Renovations. Below, we outline several of the most significant considerations that arise when U.S. forms cross international borders.

Standard Forms in Different Jurisdictions

In the United States, forms from the American Institute of Architects (AIA) and ConsensusDocs are the most widely used for construction projects, supported by a deep body of case law with respect to the AIA suite of contract forms.

Outside the U.S., however, other industry forms are available.  Examples include:

  • FIDIC – rarely used on hospitality projects unless part of a large-scale mixed-use development.
  • Joint Contracts Tribunal (JCT) – the principal suite of construction contracts in the UK.
  • New Engineering Contract (NEC) – frequently employed for public sector projects.
  • Canadian Construction Documents Committee (CCDC) – consensus-based contracts common across Canada.

These forms reflect regional practices, risk allocations, and regulatory environments that may differ significantly from U.S. norms.

Areas of Divergence

Several key issues arise when adapting U.S. forms for international hospitality renovation projects:

  • Local Law Requirements: Employment rules, licensing laws, building codes, and anti-corruption statutes can impose obligations directly on owners. Financial security instruments also differ—bank guarantees are more common abroad than U.S.-style surety bonds.
  • Risk Allocation: The distribution of risk in U.S. forms does not always align with expectations overseas, where owners or contractors may bear greater responsibilities under local practice.
  • Dispute Resolution: Internationally, arbitration is the preferred forum for construction disputes. Institutions such as the ICC, LCIA, SIAC, and HKIAC are commonly chosen, as well as country-based arbitral tribunals, and awards are broadly enforceable under the New York Convention.

Conclusion

Standard forms such as AIA and ConsensusDocs provide a familiar starting point in the United States, but they do not automatically fit the needs of overseas hospitality projects. Understanding regional frameworks, legal requirements, and dispute resolution mechanisms is essential when renovating or developing properties abroad. Careful alignment of these elements can help ensure that projects proceed smoothly and that agreements are enforceable across borders.

explore all that the world has to offer...
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Seyfarth’s Jay Houghton authored an article, “Navigating The Complexities Of Multi-State Contracting: How To Ensure Your Construction Contract Provisions Comply With State Law,” in the American Bar Association’s Spring issue of ‘Under Construction.’ Houghton discussed how various states regulate construction contracts, highlighting the differing impacts their laws have on private contract provisions.

“Ultimately, construction attorneys will be better equipped to protect and advance their clients’ interests if they understand how each of those provisions must be drafted to conform with the relevant multi-jurisdictional construction laws.”

The full article is available here.

Artist at Work
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In their most recent article, Seyfarth’s Anthony LaPlaca (Construction) and Teddie Arnold (Government Contracts) team up to address the evolving legal landscape surrounding surety liability under the False Claims Act (FCA). Through a review of key judicial decisions, Anthony and Teddie highlight how government whistleblowers have managed to sustain fraud claims against sureties, emphasizing the significant financial implications these cases can have. The article, initially published in the summer edition of Surety Bond Quarterly, can be accessed online here.

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Seyfarth’s Construction team is pleased to announce the release of the 2025 edition of our 50-State Lien Law Notice Requirements Guide, a must-have resource for commercial contractors, real estate developers, and construction professionals navigating lien notice obligations across the United States.

This comprehensive desktop reference provides a state-by-state overview of lien notice requirements, including general timing and procedural rules for filing lien notices in all 50 states and Washington, DC. Whether you’re managing projects in a single jurisdiction or across multiple states, this guide is designed to help you stay compliant and avoid costly missteps.

Prepared by Seyfarth’s nationally recognized Construction practice, this guide reflects our commitment to delivering actionable legal insights that support your business goals.

Download the latest version here.

About Seyfarth’s Construction Group

Named a 2024 Law360 Practice Group of the Year, Seyfarth’s Construction group is one of the largest and most experienced construction law practices in the United States. We offer clients the benefits of a classic construction boutique supported by the resources of a large full-service firm. We represent clients—developers, contractors, owners, architects, engineers, subcontractors and lenders—in all phases of construction projects, from inception to completion, domestically and abroad.

Last week, Seyfarth’s Brenda Radmacher presented at West Coast Casualty’s 31st Annual Construction Defects Conference.  Along with other industry leaders in the construction industry, Brenda provided professional tips on how to best manage risk, avoid, and mitigate construction disputes. The key takeaways include:

1. Innovation is Reshaping Risk

  • 3D printing, modular construction, and robotics are revolutionizing how buildings are made—but they also introduce new liability questions. 
  • As construction methods evolve, so do the types of defects and the parties potentially responsible.

2. Climate and Sustainability Are Driving Legal Change

  • Extreme weather events and climate adaptation are pushing updates to building codes and increasing defect claims.
  • Green building materials and energy-efficient systems are becoming standard, but they come with performance and durability uncertainties.

3. New Property Uses, New Legal Challenges

  • Office-to-residential conversions and Accessory Dwelling Units (ADUs) are on the rise, creating complex ownership and defect liability issues.
  • These conversions often involve aging infrastructure and zoning changes, increasing the risk of litigation.

4. Specialized Projects Bring Specialized Risks

  • Data centers and semiconductor fabs have unique defect exposures, especially related to electrical and environmental systems.
  • Energy projects (solar, wind, nuclear) face high-stakes disputes over performance, delays, and force majeure events.

5. Legal Landscapes Are Shifting

  • States like Arizona, California, Florida, and Georgia are considering updating statutes of repose, implementing inspection mandates, and changing trial procedures.
  • California’s new laws expand liability for design professionals and require inspections of balconies and decks in multifamily housing.

6. Litigation Trends to Watch in 2025

  • Expect more claims involving:
    • Delay damages and business interruption
    • Multi-policy insurance disputes
    • Defects in AI-driven or prefabricated construction
  • The complexity of ownership and construction methods will drive more multi-party litigation.