Construction Today - October 2016 - 56

Institutional

By Jeffrey Wertman

Responding to

Default Notices
S

erious financial and legal consequences can result after a notice of default
is issued on a construction project. A
notice of default, frequently accompanied by a short time to cure, significantly
increases the likelihood of a termination for
default and costly litigation or arbitration.
Responding to a notice of default requires
great care and attention to detail. Here are
five essential steps to take if you receive a
notice of default.
Take a construction default notice seriously. If you receive such a notice, seek immediate legal advice. Typically, default notices
require a response in a short period of time.
The quality of your response may be the
difference between a default which leads to
termination and the green light to continue
to perform the contract.

56

CONSTRUCTION-TODAY.COM OCTOBER 2016

Review the Contract
A second vital step is to review the contract, such as the master
construction contract or the subcontract. If the general contract is
referred to and/or incorporated by reference into the subcontract,
also review the general contract. The contract will specify the parties'
respective obligations, set forth the scope of work, the contract price,
the contract time and the terms of payment. The contract will also include essential provisions you should familiarize yourself with before
responding to the default notice.
For example, a standard subcontract will include the following:
* Flow-down provisions, under which all obligations and duties of
the general or prime contractor to the owner "flow down" to the
subcontractor;
* Incorporation by reference clauses, which expressly incorporate
as part of the subcontract all or parts of the general contractor's
contract with the owner;
* Pay-if-paid or pay-when-paid clauses, which condition the
general contractor's obligation to pay a subcontractor on receipt
of funds from the owner;


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Table of Contents for the Digital Edition of Construction Today - October 2016

Contents
Construction Today - October 2016 - Cover1
Construction Today - October 2016 - Cover2
Construction Today - October 2016 - 1
Construction Today - October 2016 - Contents
Construction Today - October 2016 - 3
Construction Today - October 2016 - 4
Construction Today - October 2016 - 5
Construction Today - October 2016 - 6
Construction Today - October 2016 - 7
Construction Today - October 2016 - 8
Construction Today - October 2016 - 9
Construction Today - October 2016 - 10
Construction Today - October 2016 - 11
Construction Today - October 2016 - 12
Construction Today - October 2016 - 13
Construction Today - October 2016 - 14
Construction Today - October 2016 - 15
Construction Today - October 2016 - 16
Construction Today - October 2016 - 17
Construction Today - October 2016 - 18
Construction Today - October 2016 - 19
Construction Today - October 2016 - 20
Construction Today - October 2016 - 21
Construction Today - October 2016 - 22
Construction Today - October 2016 - 23
Construction Today - October 2016 - 24
Construction Today - October 2016 - 25
Construction Today - October 2016 - 26
Construction Today - October 2016 - 27
Construction Today - October 2016 - 28
Construction Today - October 2016 - 29
Construction Today - October 2016 - 30
Construction Today - October 2016 - 31
Construction Today - October 2016 - 32
Construction Today - October 2016 - 33
Construction Today - October 2016 - 34
Construction Today - October 2016 - 35
Construction Today - October 2016 - 36
Construction Today - October 2016 - 37
Construction Today - October 2016 - 38
Construction Today - October 2016 - 39
Construction Today - October 2016 - 40
Construction Today - October 2016 - 41
Construction Today - October 2016 - 42
Construction Today - October 2016 - 43
Construction Today - October 2016 - 44
Construction Today - October 2016 - 45
Construction Today - October 2016 - 46
Construction Today - October 2016 - 47
Construction Today - October 2016 - 48
Construction Today - October 2016 - 49
Construction Today - October 2016 - 50
Construction Today - October 2016 - 51
Construction Today - October 2016 - 52
Construction Today - October 2016 - 53
Construction Today - October 2016 - 54
Construction Today - October 2016 - 55
Construction Today - October 2016 - 56
Construction Today - October 2016 - 57
Construction Today - October 2016 - 58
Construction Today - October 2016 - 59
Construction Today - October 2016 - 60
Construction Today - October 2016 - 61
Construction Today - October 2016 - 62
Construction Today - October 2016 - 63
Construction Today - October 2016 - 64
Construction Today - October 2016 - 65
Construction Today - October 2016 - 66
Construction Today - October 2016 - 67
Construction Today - October 2016 - 68
Construction Today - October 2016 - 69
Construction Today - October 2016 - 70
Construction Today - October 2016 - 71
Construction Today - October 2016 - 72
Construction Today - October 2016 - 73
Construction Today - October 2016 - 74
Construction Today - October 2016 - 75
Construction Today - October 2016 - 76
Construction Today - October 2016 - 77
Construction Today - October 2016 - 78
Construction Today - October 2016 - 79
Construction Today - October 2016 - 80
Construction Today - October 2016 - 81
Construction Today - October 2016 - 82
Construction Today - October 2016 - 83
Construction Today - October 2016 - 84
Construction Today - October 2016 - 85
Construction Today - October 2016 - 86
Construction Today - October 2016 - 87
Construction Today - October 2016 - 88
Construction Today - October 2016 - 89
Construction Today - October 2016 - 90
Construction Today - October 2016 - 91
Construction Today - October 2016 - 92
Construction Today - October 2016 - 93
Construction Today - October 2016 - 94
Construction Today - October 2016 - 95
Construction Today - October 2016 - 96
Construction Today - October 2016 - 97
Construction Today - October 2016 - 98
Construction Today - October 2016 - 99
Construction Today - October 2016 - 100
Construction Today - October 2016 - 101
Construction Today - October 2016 - 102
Construction Today - October 2016 - 103
Construction Today - October 2016 - 104
Construction Today - October 2016 - 105
Construction Today - October 2016 - 106
Construction Today - October 2016 - 107
Construction Today - October 2016 - 108
Construction Today - October 2016 - 109
Construction Today - October 2016 - 110
Construction Today - October 2016 - 111
Construction Today - October 2016 - 112
Construction Today - October 2016 - 113
Construction Today - October 2016 - 114
Construction Today - October 2016 - 115
Construction Today - October 2016 - 116
Construction Today - October 2016 - 117
Construction Today - October 2016 - 118
Construction Today - October 2016 - 119
Construction Today - October 2016 - 120
Construction Today - October 2016 - 121
Construction Today - October 2016 - 122
Construction Today - October 2016 - 123
Construction Today - October 2016 - 124
Construction Today - October 2016 - 125
Construction Today - October 2016 - 126
Construction Today - October 2016 - 127
Construction Today - October 2016 - 128
Construction Today - October 2016 - Cover3
Construction Today - October 2016 - Cover4
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http://digital.construction-today.com/nxtbooks/phoenix/ct_201202
http://digital.construction-today.com/nxtbooks/phoenix/ct_201201
http://digital.construction-today.com/nxtbooks/phoenix/ct_201112
http://digital.construction-today.com/nxtbooks/phoenix/ct_20111011
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http://digital.construction-today.com/nxtbooks/phoenix/ct_201108
http://digital.construction-today.com/nxtbooks/businessmedia/ct_201107
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