Contractor terminated for not paying subcontractors

In American Curtain Wall v. NTD Construction Corp. a contractor sued for breach of contract.  The defendant filed a motion to dismiss and argued that the contract was validly terminated because the contractor failed to pay its subcontractors and even after being given the opportunity to cure the breach by paying the subcontractor the contractor refused.  The appellate division agreed that the failure to pay the subcontractor was a breach justifying termination of the contract and therefore dismissed the claim for breach of contract.

The lesson to be learned for subcontractors and lower tier subcontractors is that even if you are not paid you are required to pay everyone below you and do it on time.  If you do not, you are likely breaching your own contract.

Vincent T. Pallaci is a partner at the New York construction law firm of Kushnick Pallaci, PLLC where his practice focuses primarily on construction law.  He can be reached at (631) 752-7100 or vtp@kushnicklaw.com

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