Section 3.3.4.3.3 Can the Owner Breach by Delaying Payment?

• Library: Construction Law Practice Manual 3rd Edition 2016

§ 3.3.4.3.3 Can the Owner Breach by Delaying Payment?

The owner can also breach the contract if it fails to make a progress payment to the contractor when due.⁹⁰ Indeed, the contractor may, in some cases, stop working if the owner fails to make a progress payment required by the contract, however, it is advisable to serve a written stop work notice pursuant to A.R.S §32-1129.04 before suspending performance.⁹¹ The contractor may not, however, terminate the contract with the owner unless the failure to pay was a wrongful act; not just a minimal delay, or a delay that occurred because of a dispute over the amount due. The contractor must also perform all contractual requirements for receiving payment, such as getting the architect’s certification of the pay application, delivery of lien waivers, and the proper documentation of payment applications.⁹² On the other hand, the contractor’s failure to comply with all contractual documentation requirements for a payment application does not excuse the owner from providing a timely, written rejection or notice of disputed items in the payment application.⁹³ If the delay in payment materially impairs the contractor’s ability to go forward, the contractor is justified in terminating...