What Can Be Done if a Contractor Refuses To Pay the Subcontractor?

Breach of Contract What Can Be Done if a Contractor Refuses To Pay the Subcontractor?

A Contractor Refuses To Pay the Subcontractor—How To Fight the Injustice

You have put all your energy and hard work into completing a project only to find yourself in a situation where a contractor is refusing to pay you. What are your options to make the contractor honor their side of the agreement? What can be done when a contractor refuses to pay the subcontractor?

DoNotPay has all the information you need about a breach of contract—how you can seek remedies and collect damages without filing a lawsuit. We will tell you how to draft a demand letter that should get you the desired settlement.

Types of Contractual Breaches

Getting familiar with different types of contractual breaches will help you plan your next course of action. Check out the table below for a brief overview of the basic breach of contract types:

Type of Breach of ContractBrief Description
Material breachA material breach of contract is a type of breach that makes the agreement irreparably broken. An example is a contractor hiring a subcontractor and refusing to pay for their services
Minor breachA minor (or partial) breach of contract implies that one party has violated specific terms of the agreement. For example, if the subcontractor uses different brands of materials than those specified by the agreement, they are in minor breach of contract
Anticipatory breachAn anticipatory breach of contract occurs when one party implies—with words or actions— that they will not uphold their end of the agreement. If a contractor tells the subcontractor that they will not pay them, they are in anticipatory breach of contract
Fundamental breachA fundamental breach happens when one party fails to meet a contractual term that is essential to the agreement. For example, if a subcontractor abandons the site where they should carry out the work, the contractor is forced to terminate the agreement

What Can You Do To Avoid Delays in Your Payment?

To avoid the payment refusal issue, the contractor can protect their rights by:

  1. Raising a mechanic’s lien claim
  2. Being mindful of contingent payment clauses
  3. Making a claim against the payment bond
  4. Drawing up a demand letter
  5. Filing a lawsuit

File a Mechanic’s Lien

A mechanic’s lien is a claim that guarantees payment to builders, contractors, or subcontractors. They can file it against the property owner if they do not get paid. A mechanic’s lien can be used to solve the issues of unpaid labor and material costs related to the project. The mechanic’s lien stays effective until the subcontractor is paid in full.

This document can force foreclosure on the property or make the property difficult to sell.

Be on a Lookout for a Contingent Payment Clause

Contingent payment is a clause in a contractor-subcontractor agreement stating that a contractor cannot pay the subcontractor if they do not get paid first. If you—as a subcontractor—want to avoid this type of issue, do not sign contracts with contingent payment clauses.

Claim Against Payment Bonds

A payment bond is a guarantee that a surety company will pay out the subcontractors at least part of the money that the contractor owes them. If a general contractor refuses to pay you, you can file a claim against the payment bond and get the money you have earned.

A Demand Letter

A demand letter outlines all the details of your case and includes a warning that you are ready to pursue the matter in court. It should contain:

  • The terms of your agreement
  • The breach of contract elements
  • A warning that you will seek justice in court
  • The due date by which the breaching party has to pay you out

You can find plenty of demand letter templates online, but they are generic and cannot be fully applied to your case.

Filing a Lawsuit

If all previous methods fail, you can take the contractor to court. In some states, there is a “prompt pay” law requiring the contractor to pay the subcontractor by a specified due date. The contractor may try to use affirmative defenses, e.g., provide a reason for breaching the contract. If that happens, you should hire a lawyer to protect your rights.

Sending a carefully drafted demand letter can save you from lengthy and expensive court proceedings. If you sign up for DoNotPay, we will generate a demand letter in a few simple steps!

Draft a Professional Demand Letter With DoNotPay Quickly

DoNotPay will create a demand letter that adheres to state-specific laws and caters to your particular situation. Follow these simple steps to create a custom demand letter in minutes:

  1. Log in to DoNotPay and find the Client Breach of Contract product
  2. Complete a questionnaire that will help us personalize your demand letter
  3. Select the final due date by which the contractor needs to pay you before you take the matter to court

After you provide all the information we need, we will generate a demand letter immediately.

If you need more information about breach of contract for a specific state, view the table below:

ColoradoNew YorkIllinois
VirginiaNew JerseyOhio
South CarolinaNorth CarolinaFlorida

If your demand letter goes unanswered and your employer still doesn’t pay you, DoNotPay can help you sue them in small claims court. Our app will assist by:

  • Collecting and filing all the necessary paperwork
  • Submitting the claim with the court
  • Creating a script you can use during the court hearing

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If your to-do list is getting longer by the day, we offer numerous solutions. You can focus on growing your business while we handle the endless administrative tasks.

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There Is Even More We Can Do for You

Navigating the business world can be overwhelming. If your paperwork is piling up and disputes keep emerging, start using our app and declutter your workday from numerous chores.

The world’s first robot lawyer can help you deal with the following:

  • Breach of contract
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