We just finished a project where and thought we paid all of our subcontractors. About a month after completion, our accounting department however found that our drywall sub submitted invoices a while back but we failed to pay them. Later they sent us a mistaken bill that for some reason showed they were paid in full. Looks like they made a mistake in their billing. We have a clause that states that if we don’t get a bill within 90 days then they waive payment. What obligation do we have to call this to their attention?
– Error In Our Favor?
Don’t be a pig. Pigs Get Roasted. When you notice the error before the 90 period you must go to the sub and fix it. Everything wrong about business occurs when contractors forget that there is a moral code in the world. If it is your inclination to try to take advantage of a sub who otherwise did their job, then, please get out of the business because you are a scumbag. There are no “errors in your favor.” There is right and wrong/good faith and bad faith. Sitting on that knowledge and sandbagging the unsuspecting sub is bad form and IMO, immoral. Now if the 90 days passes without your knowledge, and you later find out that the sub was not paid, you may well play the contract card and refuse to pay. Still not my style and not the style of successful companies that I know. They did the work, they should get paid. YouDig?
John Swansinger is the author and founder of YouDig and is a partner in Buckingham, Doolittle & Burrough, LLC‘s real estate and construction practice group. He works with contractors, developers and construction owners on construction law issues including construction contracts, commercial agreements, construction litigation, subcontractor issues, insurance liability, breach of contract and more. He can be reached at email@example.com or 216.615.7356.
YouDig is an online resource that connects the construction community with vital issues affecting the industry and is a component of the business law firm Buckingham, Doolittle & Burroughs, LLC that is specifically geared toward construction.