Consumer Law, Warranties Breach of Contract

Status
Not open for further replies.

jtgenterprise

New Member
My jurisdiction is: Arizona

Hello
I have entered into a contact for over $100,00.00 with a client who is the prime contractor and I being a subcontractor, to supply and install millwork for a commercial establishment.
Upon signing our agreement he issued a check for 1/3 the contract amount as a deposit. It has been 10 days since signing the contract and I have entered into 2 other contracts with subcontractors who will provide me with materials and services to complete this job. I have been spending money from this deposit on materials for this job, on deposits to the other subcontractors, and in general, I have been working diligently on the progress of this job.

Today I received an email from the prime contractor stating that the owner (whom he has a contract with) is stopping the job and he (prime contractor) wants to cancel our contract and get his deposit refunded, in full no less.
I am understanding his problem, with the current economy and all, however I would like some advice as to how much deposit to return. There are actual costs, like my time and material and supplies already spent to complete this job and even the other subs I hired with deposits are requiring a certain non-refundable amounts, but what about considerations like, in taking on this job I turned down other significant work, and there are other points at issue too...I don't want to get real picky with the prime contractor, he's a good guy, but I feel the owner has jerked a lot of people here and I feel he should be accountable for creating this colossal mess. I'm wanting to cooperate but to impose a charge of 5% of the total contract price for this breach. This would cover all hard costs plus some for the hassles. Does this sound reasonable? And more important, is there a legal stand here, to get a little more than the actual costs incurred, for a breach of contract.
 
Was this a written contract? If so, was there a provision for a situation like the one you are in right now?
 
Throw the 5% penalty in the mix and see how it goes. If the party involved does not agree see what he counteroffers and take it from there. Explain that due to the changes in the economy and the impact that the initial purchases and arrangements had on your end, you cannot take a loss in full.
 
I would take a stronger negotiating position - 5% covers your hard costs and not much more. There is no harm in trying to negotiate in your opportunity costs. 8 or 10% might be fair. You can always settle for less. You should carefully consider what your hard costs may ultimately amount to - can the subcontractors you're going to have to cancel come back to bite you?

Legally, you would be entitled to damages that would put you in the position you would be in had the contract been completed. But I would be very surprised if the contract did not contain provisions entitling the head contractor to terminate early with no penalty. The construction contracts I've seen are very favourable to head contractors.

Your state may also have specific construction laws that change your legal situation, and should consult with a local lawyer.
 
Status
Not open for further replies.
Back
Top