In North Carolina, businesses often get into disputes regarding contracts for construction and repair projects. Sometimes the dispute is between a government office and a contractor who has agreed to provide the requested construction or repairs. Business disputes under these circumstances are commonplace events that generally are settled out-of-court or prior to going to trial.
A recent dispute in another state demonstrates some of the issue that may arise. A county unit signed a contract with a contractor for the installation of new carpets for $300,000. The county failed to pay the last payment of $12,250 and failed to notify the contractor why it did not send payment.
A lower court ruled that the county was wrong in not paying and in not sending notice as required by New Jersey law. Recently, an appellate court upheld the decision, affirming an award of $12,250 and $44,000 in legal fees against the county. The county’s actions in the matter are a good example of an improper response in a certain kind of contractual dispute.
The company had installed about 400 carpet tiles as a part of the job. It repaired certain tiles that apparently were not tightly sealed. After those repairs were made, another 20 or so tiles began to come loose. The county decided to withhold the final payment and to remove all of the carpeting. It hired another company to do the job.
The courts ruled that the contractor’s deficiencies were insufficient to justify the county’s nonperformance. Because their written contract had a provision requiring a breaching party to pay the non-breaching party’s legal fees, the county was ordered to also pay the company’s legal fees. Business disputes in North Carolina are likewise guided by the basic concept that the substantial performance of a contract must be compensated as promised.
Source: lehighvalleylive.com, “Warren County owes $56,250 over carpet installation deemed shoddy“, Matthew Bultman, Oct. 27, 2014