K & G Contr. Co. v. Harris
Court of Appeals of
Facts: The plaintiff was a general contractor and the defendant was a subcontractor. Their contract required that the subcontractor perform “in a workmanlike manner”. The contract also provided for progress payments from the plaintiff to the defendant. The contract also stated that “time was of the essence”. The defendant ran into a wall with a bulldozer and caused $3,400 damage. The plaintiff withheld payments from the defendant to pay for the damage. The defendant refused to continue to perform, and the plaintiff sued. The trial court found for the defendant on its claims and for the plaintiff on its claim of $3,400 for the wall. The plaintiffs appealed.
Issue: Does the contractor have the right to withhold progress payments to partially pay for the damages caused by the subcontractor’s negligence?
Rule: “If the performing party stops performing, or
performs badly, the paying party can stop paying.”
Analysis: The court holds that the promises in this case were mutually dependent. In particular, the subcontractor’s promise to perform in a workmanlike manner was precedent to the contractor’s promise to pay each installment. The court further holds that the subcontractor breached the promise to perform in a workmanlike manner and thus the contractor’s duty to pay the installment was not triggered.
Conclusion: The judgment against the plaintiffs is reversed, while judgment is entered for the plaintiffs for $450 against the defendants.