Implied Contract Provisions: Termination for Convenience and Prevailing Wages
Whether you're a general contractor (GC) or a subcontractor (sub) on a construction project, you routinely enter contracts as part of your business. Many construction contracts expressly include provisions that define the scope of the project, set timelines for completion, outline each party's liability and indemnity, or lay out rules for arbitration or mediation.
However, many construction contracts-particularly government contracts-also have provisions that are implied by law. Among the most important implied contract provisions are termination for convenience and prevailing wages. These implied contract provisions can affect your company and should be considered carefully before the contract is signed. For specific advice regarding your situation, consult an experienced construction law attorney.
Prevailing Wages
Prevailing wages provisions are intended to protect workers from losing out on the wages they're due. They apply to both GCs and subcontractors:
- GCs must ensure that their own workers and the people working for their subcontractors receive prevailing wages at the time of the job. If you're a GC and you hire a sub that doesn't pay prevailing wages to their workers, you could be held liable for their pay.
- Likewise, if you're a sub but you've hired your own sub to do the actual labor while you retain a management position, you must ensure that your workers and your subcontractors' workers receive prevailing wages.
Termination for Convenience
Another often-overlooked provision required by law is termination for convenience-or a T for C clause. Essentially, this clause allows you to end a contract without having to establish that another party is in default. You may do so because your needs have changed or because you need to assign the contract to another party.
If you have to pull out of a project early, you don't want to leave others holding the bag. Along with ensuring workers receive any prevailing wages they're due, you also have to account for other termination costs, such as de-scoping requests or requests for design or plan modifications.
To help protect yourself, you must have a strong lien release provision in your contract with your subs or sub-subs to make sure they've made good on their end, such as paying their employees their due. Not only is this important for verification purposes, but your attorney may need to reference it during arbitration or litigation.
Emalfarb Law Can Assist With All Areas of Your Construction Contract
At Emalfarb Law, you'll find a team of highly experienced, dedicated construction law attorneys who have earned national recognition for their legal acumen and skill. We also have a vast nationwide network of attorneys and other legal resources, so we can assist you no matter where you live or work.
Contact us today for a confidential consultation. You can reach us through our online consultation reservation form and provide us details about your needs so we can better serve you.
For more detailed information regarding implied contract provisions for GCs and sub, please view our webinar on Avoiding One-Sided Contracts.
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