Contract documents

If you’re a contractor, you know that getting paid on time is a constant worry. If payments come late or not at all, you will likely have a bundle of subcontractors and suppliers at your door asking for their own payment with little sympathy for your plight.  If you are a contractor and don’t get paid on time, can you just stop work?  Section 9.7 of the A201®-2017, General Conditions of the Construction Contract offers some guidance.

§ 9.7 Failure of Payment If the Architect does not issue a Certificate for Payment, through no fault of the Contractor, within seven days after receipt of the Contractor’s Application for Payment, or if the Owner does not pay the Contractor within seven days after the date established in the Contract Documents, the amount certified by the Architect or awarded by binding dispute resolution, then the Contractor may, upon seven additional days’ notice to the Owner and Architect, stop the Work until payment of the amount owing has been received. The Contract Time shall be extended appropriately and the Contract Sum shall be increased by the amount of the Contractor’s reasonable costs of shutdown, delay and start-up, plus interest as provided for in the Contract Documents.

Section 9.7 allows the contractor to stop work in a few scenarios, but those scenarios come with a few notable caveats and conditions. First, the contractor may stop work if the architect fails to issue a certificate for payment within seven days after receipt of the contractor’s application for payment. However, in such a scenario, the contractor must be free from fault in the architect’s failure to issue a certificate of payment. Second, the Contractor may stop work if the owner fails to make a payment to the contractor within seven days after the date established in the contract documents.  In either of these scenarios, the Contractor must give seven additional days’ notice to the architect and owner before it can stop work on the project. Moreover, the contractor may only stop work until the amount owing has been received. If the contractor has successfully navigated these caveats and conditions, and properly stopped work on the Project, the contractor is entitled to an extension of the contract time and contract sum due to the work stoppage.

So, can you stop work if you haven’t been paid?  Yes, but you should look closely at your contract first to make sure you have followed all the proper procedures.