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Under the statutes and/or case law in many states, unlicensed contractors cannot enforce the construction contract. Sometimes, however, parties knowingly contract with the unlicensed. To be blunt, they are not legally entitled to payment for their work, no matter how outstanding that work may have been.
Many construction contracts and subcontracts provide for arbitration of disputes. To be enforceable, contracts require “consideration,” a bargained-for exchange of value or promises of value on both sides. Some of them give just one of the parties an option to require arbitration. See DiMercurio v. Ancel, Inc.
In an earlier blog ( #62 ) I discussed the implied covenant of good faith and fair dealing that limits a contracting party’s exercise of the discretion afforded to it by the parties’ contract. Such a provision was part of a commercial painting subcontract in Hate to Paint, LLC v. Ambrose Development, LLC , No.
The problem is not solved by prime contract provisions requiring a general contractor to promptly clear any lower tier mechanic’s liens or face having payments withheld. Otherwise, every payment bond would automatically convert every subcontract on the bonded project into a “no lien” subcontract. 581 (2004).
Before subcontracting any significant portion of a long term job to someone who isn’t known to be financially solvent, the wise general will ask for proof that the sub can carry the strain of weekly payroll through a monthly requisition procedure, with retainage. But hey, who ever said that general contracting was risk-free?
When that is the case, can a general contractor with a pay-if-paid provision in its subcontracts hide behind that provision when the reason for owner nonpayment is the general contractor’s own default? “Conditions in contracts are construed in accordance with their ordinary meaning.” JBC Merger Sub LLC v. 145, 286 A.3d
The harsh reality virtual bookkeeper traps I have shared with you come from reviewing hundreds of offers from virtual "Virtual Bookkeepers" to subcontract from us. Outsourced Contractor Bookkeeping Services like ours do not rely on in-house servers; or your servers, instead we contract with an Intuit Approved Commercial Hosting company.
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