Rant: Found a sneaky way GCs hide late payment clauses in contracts

Was bidding on a commercial build in Calgary last month. Read the contract three times. Looked standard. My buddy who does legal reviews flagged one paragraph buried on page 14. It said if the owner's bank delays funding, we still owe penalties. No prorating for weather or supply issues either. I almost signed it. That clause basically pushed all the risk onto subs with zero upside. Now I check every contract for bank delay language. Anyone else find nasty surprises hidden in their bid agreements?

3 comments

3 Comments

shane_williams1mo ago

Honestly I kinda get why GCs do it though. If the owner can't pay out because their financing fell through the GC is stuck holding the bag just as much as you are, and nobody wants to eat that cost alone. Maybe it's less about screwing subs and more about spreading the risk around since everyone in this chain is gambling on the same money. If a contract is clean and the price is right, does a tight payment clause really matter that much?

morganhayes1mo ago

Wait, isn't that just kicking the can down the road though @shane_williams? I get the logic you're laying out, but a "clean contract" with a tight payment clause can still leave a sub high and dry for months while the GC fights the owner over financing. I've seen a buddy lose his whole crew's spring because the owner's bank pulled out last minute, and the GC just shrugged and said "sorry, nothing I can do." Spreading risk is one thing, but it feels like the sub ends up taking the biggest hit every single time, and that's just not fair.

evac725d ago

Forget the GC and the owner for a minute and look at the material suppliers. They are the ones who REALLY get squeezed because they gave you the lumber on net 30 terms and now you can't pay them because the GC is holding your check. That puts YOUR credit and YOUR future jobs on the line, not just this one contract, and a "clean contract" doesn't do a THING to protect that relationship. Tight payment clauses matter because they are the ONLY thing keeping a sub from becoming the owner's unofficial bank, and that's a role nobody should be forced into.