You know the situation – your subcontractor is doing a horrible job and you want them off the job. If you terminate the contract and bar them from jobsite, do you have to provide an opportunity them an opportunity to cure? You may if you are thinking about back charging the subcontractor for repairs.
A recent case out of Oregon discussed this very situation. There, the general contractor terminated the subcontractor’s contract for convenience, removed it from the jobsite, and refused to pay the subcontractor for materials delivered to the jobsite. The subcontractor filed a construction lien to recover the costs of the materials. The general contractor countered that it did not have to pay the subcontractor because the cost to repair the subcontractor’s work exceed any amount the subcontractor alleged was owed.
The court ruled in favor of the subcontractor and held that when a contract is terminated for convenience, the cost of curing the defect may only be recovered after providing the subcontractor with an opportunity to cure. Here, the general contractor did not give the subcontractor the opportunity cure, so it could not recover the cost of curing the subcontractor’s defective work.
This case reminds us of two important considerations. First, read your contract and understand the termination provisions. Second, be wary of terminating a subcontractor without providing the subcontractor the opportunity to cure its mistakes.