Entrepreneurship & Small Business

Urgent: Contractor is not finishing the final work

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  • Jan 20th, 2014 3:37 am
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Aug 27, 2011
328 posts
17 upvotes

Urgent: Contractor is not finishing the final work

Hey everyone recently i have opened a new store and i have paid the contractor always on time in full except for $10000 holdback agreed to be paid once all the work is completed. But hes been asking for his money and refusing to finish the final work. I was wondering if someone here can help me about legal implications that i could face if i dont pay him until he finishes the work? Am i on the wrong? Hes also asking me to charge interest now and its only been 5 days since we opened the store. I would really appreciate if someone could help me as i am really worried. Here are important parts of the contract that i think relate to this matter:

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ARTICLE A-5 PAYMENT

5.1	Subject to the provisions of the Contract Documents, and in accordance with legislation and statutory regulations respecting holdback percentages and, where such legislation or regulations do not exist or apply, as agreed between the Owner and the Contractor herein, subject to a holdback of    0     percent ( 0% ),   the Owner shall pay in Canadian funds:


.2	progress payments to the Contractor on account of the Contract Price together with such Harmonized Services Taxes as may be applicable to such payment, and shall be made by the Owner in full, upon receipt of the invoice;

.3	upon Substantial Performance of the Work, pay to the Contractor the unpaid balance of any agreed upon holdback amount when due together with such Harmonized Services Tax as may be applicable to such payment.

5.2	In the event of loss or damage occurring where payment becomes due under the property and boiler insurance policies, payments shall be made to the Contractor in accordance with the provisions of GC 10.1 -
INSURANCE.

[B]5.3	Interest

.1	Should the Owner fail to make payments to the Contractor as they become due under the terms of the Contract or in an award by arbitration or court, interest at 2.0 percent (2.0%) per annum above the prime rate on such unpaid amounts shall also become due and payable until payment. Such interest shall be compounded on a daily basis. The prime rate shall be the rate established by the Bank of Canada as the minimum rate at which the Bank of Canada makes short term advances to the chartered banks.[/B]


PART 4 PAYMENT

GC 4.1 FINANCING INFORMATION REQUIRED OF THE OWNER

4.1.1	The Owner shall, at the request of the Contractor, prior to execution of the Agreement, and/or promptly from time to time thereafter, furnish to the Contractor reasonable evidence that financial arrangements have been made to fulfill the Owner’s obligations under the Contract.

GC 4.2 APPLICATIONS FOR PROGRESS PAYMENT

4.2.1	Applications for payment on account as provided in Article A-5 of the Agreement - PAYMENT may be made as the Work progresses.

GC 4.3 PROGRESS PAYMENT

4.3.1	The Owner shall make payment to the Contractor on account as provided in Article A-5 of the Agreement -PAYMENT immediately upon receipt of the Contractor’s invoice.

GC 4.4 SUBSTANTIAL PERFORMANCE OF THE WORK

4.4.1	When the Contractor considers that the Work is substantially performed, or when permitted by the lien legislation applicable to the Place of the Work a designated portion thereof which the Owner agrees to accept separately is substantially performed, the Contractor shall prepare and submit to the Owner a comprehensive list of items to be completed or corrected and apply for a review by the Owner to establish Substantial Performance of the Work or substantial performance of the designated portion of the Work. Failure to include an item on the list does not alter the responsibility of the Contractor to complete the Contract.

4.4.2	No later than 3 days after the receipt of the Contractor’s list and application, the Owner will review the Work to verify the validity of the application, and no later than 3 days after completing the review, will notify the Contractor whether he agrees that the Work or the designated portion of the Work is substantially performed.

4.4.3	Immediately following the agreed Substantial Performance of the Work, the Contractor will establish a reasonable date for finishing the Work.

[B]GC 4.5 FINAL PAYMENT

4.5.1	When the Contractor considers that the Work is completed, the Contractor shall submit an invoice for final payment.

4.5.2	The Owner will, immediately upon receipt of the invoice from the Contractor for final payment, review the Work. The Owner will immediately after reviewing the Work, pay the Contractor in full, or give reasons, in writing, as to what he considers is incomplete. Upon agreement between the Owner and the Contractor as to such incomplete work, and upon completion of any such incomplete work, then the Final Payment will be made by the Owner to the Contractor immediately.[/B]

GC 4.6 PAYMENT OF HOLDBACK UPON SUBSTANTIAL PERFORMANCE OF THE WORK

4.6.1	After Substantial Performance of the Work, the Contractor shall submit an application for payment of the holdback amount in accordance with paragraph A5-1, if applicable.

4.6.2	The holdback amount is due and payable on the day following the expiration of the holdback period stipulated in the lien legislation applicable to the Place of the Work. The Owner may retain out of the holdback amount any sums required by law to satisfy any liens against the Work.

7 replies
Deal Addict
Dec 19, 2008
1026 posts
208 upvotes
If he's in breach of the contract then you have nothing to worry about except headaches in trying to get someone else to finish the work if he bails on you.
Make sure to document everything and point out 4.5.2 to your contractor and remind him of the contract you both established.

Btw, I've dealt with sketchy contractors here in Edmonton and through experience I've found that if they are very persistent in getting the money before the work is completed (even if you have held up your portion of the contract to the best of your ability), they usually are usually cash-strapped and need that money to finish the project which of course is no way your fault. Nevertheless they will try to set a lien or withhold work until they get that money.

Here's a quick read on hold backs too
http://www.theglobeandmail.com/life/hom ... cle571874/
Newbie
Jun 14, 2013
83 posts
3 upvotes
Toronto
I agree with the above post! If he has done the work to your satisfaction and seems like a decent guy than I would go ahead and pay him.
[OP]
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Aug 27, 2011
328 posts
17 upvotes
Kadri43 wrote:
Jan 19th, 2014 4:05 pm
I agree with the above post! If he has done the work to your satisfaction and seems like a decent guy than I would go ahead and pay him.
Hey guys thx for replying. This contractor has given me headaches since day one. I am sure he wont finish the work once he receives the money. I think u havent read my post but he HASNT DONE THE WORK to my satisfaction hence the reason y i am holding some money so he finishes the work. Before this i have always paid him upfront before he did any work.
[OP]
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Aug 27, 2011
328 posts
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ditachan wrote:
Jan 19th, 2014 3:51 pm
If he's in breach of the contract then you have nothing to worry about except headaches in trying to get someone else to finish the work if he bails on you.
Make sure to document everything and point out 4.5.2 to your contractor and remind him of the contract you both established.

Btw, I've dealt with sketchy contractors here in Edmonton and through experience I've found that if they are very persistent in getting the money before the work is completed (even if you have held up your portion of the contract to the best of your ability), they usually are usually cash-strapped and need that money to finish the project which of course is no way your fault. Nevertheless they will try to set a lien or withhold work until they get that money.

Here's a quick read on hold backs too
http://www.theglobeandmail.com/life/hom ... cle571874/
so that link is mainly based on house contractors does it apply to commercial stores as well? Its saying that i have 45 days until i have to give him the holdback amount? So do i have to pay him that hold back amount even if the work isnt completed to my satisfaction? This seems like the owner being screwed by contractor?
Also that link talks about that if the contractor doesnt pay his subtrades then they can hold a lien against my property and i wont be able to sell it? So how can i find out if he has paid all his sub contractors?
Banned
User avatar
Jun 2, 2009
2738 posts
150 upvotes
Toronto
What do you mean to your satisfaction? i feel we are only getting one side of the story here...has he done shoddy/unsafe work? or is this a case of you picking finishes you don't like, and wanting him to change them?...i mean what is the actual reason that the disagreement started? If he did all his work according to the contract and the work was done properly, then you should not be holding back anything...he could put a lien on your property, and you will eventually have to pay.
Idle hands are the devils playthings
[OP]
Member
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Aug 27, 2011
328 posts
17 upvotes
HeavenLeigh wrote:
Jan 19th, 2014 8:55 pm
What do you mean to your satisfaction? i feel we are only getting one side of the story here...has he done shoddy/unsafe work? or is this a case of you picking finishes you don't like, and wanting him to change them?...i mean what is the actual reason that the disagreement started? If he did all his work according to the contract and the work was done properly, then you should not be holding back anything...he could put a lien on your property, and you will eventually have to pay.
Well theres a list of work that still needs to be completed here are the few things.
- Many tiles that he installed in kitchen have been scratched and broken due to his fault during construction
- filter tap water thing has been leaking
- music in store hasnt worked since day one (speaker problem)
- rubber base in the back prep area are loose and not put properly
These are just the few things out of many. As i cant list all of them. Even the franchise manager told me those things need to be completed before i can pay him. That is the reason of the holdback otherwise he would never finish all that listed work.

What do you mean he can put lien on my property? Can you elaborate that term?
thx
-
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Jun 2, 2009
2738 posts
150 upvotes
Toronto
GanJa786 wrote:
Jan 19th, 2014 10:47 pm
Well theres a list of work that still needs to be completed here are the few things.
- Many tiles that he installed in kitchen have been scratched and broken due to his fault during construction
- filter tap water thing has been leaking
- music in store hasnt worked since day one (speaker problem)
- rubber base in the back prep area are loose and not put properly
These are just the few things out of many. As i cant list all of them. Even the franchise manager told me those things need to be completed before i can pay him. That is the reason of the holdback otherwise he would never finish all that listed work.

What do you mean he can put lien on my property? Can you elaborate that term?
thx
-
Plz refer to this
http://www.glaholt.com/construction-liens.html
Idle hands are the devils playthings
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