Situation 1: Help

A job is running late for a hundred reasons. The general contractor wants it finished and asks if you could use some help. You say “yes.†Two of the GC’s employees then show up and work with you for a month. At final payment, the GC deducts $40,000 as a backcharge for the two men. You are surprised.

Informality in addressing serious construction difficulties can blur lines of contract obligations. It is not recommended. Under these facts, a brief conversation between a subcontractor and the general contractor created the potential for a claim.

Most contracts do not permit a backcharge for incomplete or delayed work without prior notice of a default, and often there is a “cure†period before the default takes effect. A strict application of a default clause would doom the backcharge here, where the general contractor volunteered the services of its employees to perform a portion of the subcontractor’s work.

Were a fine point to be made, the subcontractor might not be able to bill for the work it did not do, but still would be entitled to its markup for that work. The evaluation of the volunteered effort would be the value to the subcontractor, based on its budgeted amounts and not on the actual costs to the volunteer.

But, what about the subcontractor’s acquiescence? It observed the volunteered work, after agreeing to it, and made no effort to stop the assistance. Same result as above: There was no default. In addition, it is plain that there was no contract modification, even orally, as there had been no agreement on price or on the extent of the work to be provided by the general.

The correct answer is B. You don’t owe the money. The GC was voluntarily accelerating the work for his own benefit.