![]() Even then, the subcontractor will usually be backcharged for the cost of completing and/or remediating its work, and in some cases, the subcontractor may actually owe money back to the general contractor if such costs exceed the balance unpaid to the subcontractor. ![]() This kind of termination “for cause” is significant because most construction contracts provide that the subcontractor will not be entitled to receive any further payment for work performed until the project is finished. ![]() Only after providing notice and an opportunity to cure can the contract be terminated, and only if the default remains uncured. Importantly, most contracts require that, before terminating a subcontractor for deficient work, a general contractor must first provide the subcontractor with notice of the default and an opportunity to cure the deficiency (for example, seven days). Contracts often describe this type of deficiency as a “failure or neglect to carry out the work in accordance with the subcontract.” Similar provisions are found in contracts between owners and general contractors. In one common scenario, a contractor is permitted to terminate its subcontractor “for cause” if the subcontractor provides deficient work or fails to meet the project schedule. Construction contracts generally outline various scenarios in which a party can terminate the contract.
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