Michigan has a unique legal background as it pertains to contracting and engineering. To frame the discussion, one must first consider whether the state is a common law jurisdiction or a statutory law state. The answer to this question has a substantial impact on the course of constructing, improving, and altering any building.

Whether Michigan is a common law state depends largely on which part of the Michigan Constitution you refer to. A strict reading of the state Constitution seems to indicate that all statutes are subject to common law precedent. The Michigan legislature possesses the constitutional right to write laws. That does not prevent precedent from overriding any laws it passes. However, that would apply only to the extent that the law conflicts with common law. The Constitution also explains that “all laws relative to the judiciary of the state shall have a uniform operation.” That means that every engineer and contractor across the state are bound the same way.

The fact that Michigan is, at least in theory, a common law state does not have as large a bearing on standard practice in construction. However, it does have a bearing on contract enforcement, which is critical when it comes to project management. Michigan’s laws relating to contract enforcement greatly favor the state’s engineers and contractors. It essentially creates a limited waiver of sovereign immunity, which allows contractors and engineers to sue and recover damages from the state government if there is a breach of their contract. Engineers and contractors are generally required to bring a lawsuit within three years of the breach. There is no other statute of limitations that applies to contract disputes.

Common law states analyze engineering contracts largely the same way they analyze any other agreement. For example, the parties may not bring about any tort claims for a breach of contract. Parties who do not abide by the contract are liable for what the other party lost as a direct result of the breach. If the breach involved fraud, the affected party may be able to receive damages for indirect losses as well.

Michigan’s law does not classify new construction as a form of property damage under Michigan Compiled Laws section 691.991. There are some other limitations on liability. One is that an attorney may only collect 15 percent of the damage award (attorney fees) from the losing party if the amount awarded was less than the settlement offer. That means that parties may want to negotiate their own fees if they hope to recover from the losing party. Much of the information above applies only to residential projects. If an engineering contractor takes on a commercial project, there are more limitations.