How a Construction Business Hired a Lawyer to Review a Construction Services Agreement in California

Can a construction services agreement be terminated by the contractor if the owner fails to make payment within the agreed timeframe?

I recently entered into a construction services agreement with a contractor to renovate my commercial property. The agreement stipulates that I will make payments to the contractor within 30 days of receiving an invoice. However, due to financial constraints, I have been unable to make timely payments and have fallen behind on several invoices. I am concerned that the contractor may terminate the agreement and leave the project unfinished if I am unable to catch up on payments. Can the contractor legally terminate the agreement if I fail to make payment within the agreed timeframe?

Arthur S.

Answered Jul 23, 2024

Simple answer...Yes. That said, most Owner/Contractor agreements....particularly AIA forms of Owner/Contractor Agreement, empower a contractor to terminate the agreement on written notice following certain work stoppage and cure periods. A more precise answer, in this instance,, would require a review of the relevant provisions of the underlying Owner/Contractor Agreement in question.