Can You Stop Working If You Don’t Get Paid?
A considerable number of cases that concern work abandonment on a construction project are by and large due to a dispute over nonpayment. Should a contractor continue to invest time and money into a project or leave the job site altogether if they don’t receive a payment? Our Fort Lauderdale construction lawyers will discuss some options below.
Why Contract Language Matters
When drafting contracts, contractors should make certain that they understand provisions that will protect them in the event of nonpayment. Contract language is critical and can be the determining factor on whether or not the contractor is entitled to suspend project work. Without such language, stopping work can lead to a breach of contract.
What Are Your Options?
There are several things a contractor can do to protect themselves when dealing with nonpayment. This includes:
- Requiring interest payments on late payments. Why should you provide free financing?
- Separating disputed invoices from non-disputed ones. Be sure the language in the contract allows a hold on only the disputed amount owed and not the entire project.
- Setting a standard on payment terms. Standard payment terms will vary, but some clients will push beyond the deadline, causing cash-flow problems for contractors. Tailor the language in the contract to ensure you can stop work if work is more than 30 to 45 days late, for example.
- Asking to be paid for additional costs. If after you have provided a written notice regarding stopping work and you were to restart work down the line, be sure your contract has wording that entitles you to additional costs associated with restarting the work and extensions for each day the work was stopped.
- Terminating the contract for nonpayment. Adding language to a contract that authorizes you to stop work for good if you have not been paid in a reasonable period of time (i.e., 60 days).
Ultimately, a contractor can continue working in absence of payment or stop working. When choosing to stop work, make sure all bases are covered. Contractors should always consult with Fort Lauderdale construction lawyer before hastily stopping work. An attorney can review the facts of your case and contract to determine if stopping work is the right course of action. Additionally, the contractor must ensure they are not at fault for payment being withheld and they should follow notice provisions.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.