In the absence of a joint audit agreement, the main contractor pays the subcontractor for the work at the end of the work. The subcontractor turns around and pays the supplier for the supplies of building materials that participated in the work. Ideally, all parties are paid, but of course, there are inefficiencies and risks that interrupt the smooth debacle of construction payments. Click the button below to download a free shared check template that you can use for your projects and jobs. Joint cheque agreements are not a creature of the law. In other words, there is no national or federal law that specifically regulates joint cheque agreements or offers guidelines. As a general rule, general contractors or promoters do not want to create an additional obligation through a joint audit agreement. Writing a guide on the application of a pooled check agreement is a difficult topic, as these agreements are a contractual creation and vary greatly from agreement to agreement. As a result, what may be appropriate for one agreement cannot suit another. It is therefore advisable that you consult here, as a first step, a lawyer in construction. Pooled cheque agreements are the most common in the construction industry, as so many levels of parties are involved in a typical construction project. This reality of the construction sector fits perfectly into the concept of common control. What determines whether the payer must or can make common cheques? The joint cheque agreement, of course.
Watch this scenario. They owe $100,000 for materials delivered to a subcontractor more than two months ago. The account has been identified as a high risk, all furnishing work has been frozen, and you have begun to prepare a recovery plan that may include the deposit of a bond right or a mechanical pledge right. The general contractor will send you a cheque for $85,000, which was written together to you and the subcontractor. You would really need that money. It is possible to follow the parties by focusing on the obligations of the pooled cheque agreement. Unfortunately, any other argument under the sun should get involved (processing disputes, delays, damages, violations, etc.). If you want to enforce your pooled check agreement, don`t be naïve about these other disputes. Keep them in mind and develop your overall legal plan. This means that there is no standard agreement for joint examinations. Subcontractors who need cash can get their hands on a joint check and falsify the other party`s signature to deposit it themselves. You may have good intentions to pay yourself, but you may be overlooked due to cash flow issues.
In accordance with the common check rule, if you are in favor of this $85,000 check, you waive your rights to the remaining $15,000 debt. The period. End of story. You cannot take legal action for the unpaid party and any pledge or surety claims you have in force are deemed invalid. An example of a joint construction industry audit agreement would be for the prime contractor or general contractor to agree to jointly sign a cheque to the first stage subcontractor and that subcontractor`s equipment suppliers. Sometimes a contract has very strict enforcement conditions that require formal communications, mediation, arbitration proceedings, healing delays, or delays in performance. A misstep with these procedures not only costs you valuable time and money, but can also cost you the entirety of your claims. . . .