Dual Party Check Agreement
The primary contractor should ensure that its subcontracting allows for the application of common controls. What happens when a principal contractor does not enter into a formal joint audit agreement with its subcontractor, while issuing joint controls on the supplier`s supplier? Unilateral issuance of joint controls may constitute a violation of subcontracting. The principal contractor must obtain the agreement of its subcontractor before making joint payments. The best method is to address this problem in advance with explicit subcontracting language that gives the prime contractor the right, but not the obligation, to carry out joint checks if necessary. Make it clear that the right to conduct joint checks does not create an obligation to pass common controls. Without express subcontracted authorisation for the granting of common controls, the owner cannot release his payment obligations to the subcontractor by unilaterally issuing joint controls and he remains responsible for the full remuneration of his subcontractor, whether or not the contractor is paid or not. However, a general contractor does not need the approval of the low-level supplier or subcontractor to enter into a joint audit agreement with the subcontractor. Consider including a joint audit agreement as an image of the subcontractor and making the subcontractor the failure to implement the common audit agreement regarding a substandard supplier or subcontractor as the basis for the reluctance to make advances to the subcontractor. Under the common cheque rule, if you put that $85,000, you waive your rights to the remaining $15,000 in debt. Period. End of story.
You cannot take legal action against the unpaid party and all mortgage or bond rights you submit will be considered void. It is possible that the parties will focus closely on the obligations of the Common Control Agreement. Unfortunately, any other argument will be taken under the sun (work conflicts, delays, damages, violations, etc.). If you want to impose your common control agreement, don`t be naïve about these other disputes. Keep everything in mind and come up with your great legal plan of the picture. The first concern of the owner is whether the issuance of a common cheque is in fact a payment to the general contractor. It will only be negotiable if it is approved by both parties. Without the permission of the general contractor, a joint check cannot constitute a valid form of payment. The owner must be careful not to violate his contract with the general contractor because he has not paid the corresponding advances.
Negotiating a common control without the appropriate mentions can have serious consequences. What happens if the subcontractor successfully deposits the cheque without the consent of the contributor? In this case, the bank that pays a joint cheque with a single signature may be held responsible for the conversion to the low-level contributor or subcontractor who did not support the common cheque.