Don Gregory | Kegler Brown Hill & Ritter | June 4, 2015
The AIA A401 Subcontract allows an unpaid subcontractor to stop work until payment is received, “upon seven additional days’ written notice to the Contractor.” (§4.7.1).
In a New York school construction dispute, the subcontractor was unpaid for three months and stopped work, but did so without providing the contractual 7-day notice prior to suspending work. The Court excused the subcontractor’s untimely notice by finding that the general contractor materially breached the subcontract by failing to pay the subcontractor. U.W. Marx, Inc. v. Koko Contracting, Inc., 2015 WL 263904 (3d Dep’t. 2015).
Obviously, the best course of action is to provide the proper notice prior to stopping work, but this case may provide some relief to unpaid contractors and subcontractors who neglect to provide proper notice prior to stopping work.