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PCCA Journal|1
st
Quarter 2010
27
a period of 30 days by the contrac-
tor because the architect has not
issued a certificate for payment .
. . or because the owner has not
made payment thereon..., then
the contractor may, upon seven
additional days’ written notice
to the owner and the architect,
terminate the contract and recover
from the owner payment for all
work executed for any proven
loss sustained upon any material,
equipment, tools, construction
equipment and machinery, includ-
ing reasonable profit and damages.
Termination by the Owner
If the contractor is adjudged a
bankrupt, or if he makes a gen-
eral assignment for the benefit
of his creditors, or if a receiver
is appointed on account of his
insolvency, or if he persistently or
repeatedly refuses or fails, except
in cases for which extension of
time is provided, to supply enough
properly skilled workmen or prop-
er materials, or if he fails to make
prompt payment to subcontractors
or for materials or labor, or persis-
tently disregards laws, ordinances,
rules, regulations or orders of any
public authority having jurisdic-
tion, or otherwise is guilty of a
substantial violation of a provision
of the contract documents, then
the owner, upon certification by
the architect that sufficient cause
exists to justify such action, may,
without prejudice to any right or
remedy after giving the contrac-
tor and his surety, if any, seven
days’ written notice, terminate
the employment of the contrac-
tor and take possession of the site
and of all materials, equipment,
tools, construction equipment
and machinery thereon owned
by the contractor and may finish
the work by whatever method he
deems expedient. In such case the
contractor shall not be entitled to
receive any further payments until
the work is finished.
Termination clauses are impor-
tant because of the significance of
their impact and the finality of their
effect. Contractors must be aware
of the notice provisions in termina-
tion clauses when developing their
agreements with subcontractors.
The contractor should allow itself
ample time to cure a subcontrac-
tor’s default before the owner is
permitted to terminate the general
contract.
Greg Spalj is a member of the PCCA
and represents many of its members.
He has a national law practice repre-
senting construction contractors. He
can be reached at (612) 359-7631 or
gspalj@fwhtlaw.com. www.GMPtools.com+1.215.357.5500
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