Section 58-55-604 of the Utah Code states that a contractor may not seek “collection of compensation” in court for any work that requires a license if, at the time the contractor entered into the contract, the contractor was not licensed. In a recent ruling, the Utah Court of Appeals addressed potential common law exceptions to that statute in the case of R4 Construction LLC v. InBalance Yoga Corporation, 224 UT App 121 (2024).

R4 Construction had not been licensed when it contracted with InBalance but asserted that some or all of the common law exceptions to the law applies, which are as follows:

1. An unlicensed contractor can recover if the party for whom the work is done possesses skill or expertise in the field;

2. An unlicensed contractor can recover if its work is supervised by a licensed contractor;

3. An unlicensed contractor can recover if the reason for its unlicensed status is minor and does not undermine its ability to do the work; and

4. Courts have considered whether a contracting party have relied on the contractors representation that it was properly licensed and whether the contractor posed a performance bond.

In the R4 Construction case, the trial court granted R4’s summary judgment motion, ruling that R4 had proven one of the above common law exceptions based on InBalance’s alleged admission of certain facts, namely that its owner had acted as a general contractor in building two homes and that she had supervised the R4 job site. The Appellate Court reversed the trial court, holding that there were factual issues concerning both the first and the third common law exceptions listed above, and the Court sent the case back to the trial court for additional discovery and hearings.

While this ruling has only an indirect impact on bond claims, an unlicensed contractor may well establish a bond claim against a general contractor’s license or payment bond if it can prove one of the common law exceptions, as exceptions 1 and 2 would probably apply.