Getting a joint check agreement is great for your company.  In fact, as part of our Joint Check Blog Series we commented that these contracts are a Great Tool For Credit Managers. Nevertheless, joint check agreements are sometimes violated like anything else.

Why You May Need To Enforce A Joint Check Agreement

Let’s start with some reasons why you may put into a position where a joint check agreement may need to be enforced.  Here are some common scenarios:

Joint Payee Refuses To Sign The Check

Joint checks are just that: a check instrument written to your company and somebody else. When everything is going smoothly on a project there usually aren’t any problems. These checks come in, they’re signed by the parties, and deposited by one party according to an agreement. For a variety of reasons, however, a project may reach a point when the parties stop cooperating with one another or when one party feels entitled to remedies or payments that are in dispute. This situations are challenging when joint checks are in play, since one party will likely refuse to sign.

Owner or Contractor Doesn’t Include You On The Check

Another situation may arise when the paying party issues the check without your company on it in violation of a joint check agreement. This can happen accidentally or intentionally. Nevertheless, it is a violation of the joint check agreement, and if the parties do not cooperate to correct the issue, the paying party may be reluctant to issue another check to you and pay for the work or materials twice.

How To Enforce Your Joint Check Agreement

Writing a how-to on  enforcing a joint check agreement is a tricky subject since these agreements are a creature of contract and vary greatly from one agreement to the next.  Accordingly, what may be appropriate for one agreement may not be appropriate for another. It’s advisable, therefore, that you consult with a construction attorney as your first step here.

Step 1: Review Your Joint Check Agreement and Follow Procedures

The first thing you’ll want to do is review your joint check agreement’s terms. Make sure that a violation actually occurred (duh!), but then also review the terms to see if there are defined procedures on enforcing your agreements.

Sometimes a contract will have very strict enforcement terms requiring formal notices, mediation, arbitration, cure periods or enforcement delay. Making a misstep with these procedures will not only cost you precious time and money, but it may cost you your entire claim. It is no unheard of for entire valid claims to get dismissed because parties did not follow their notice or enforcement procedures.

Step 2: Consider Your Big Picture Argument

Enforcing a joint check agreement may be the whole dispute. A lot of the time, however, it is only a tiny part of the arguments between the parties.  It is because of a bunch of other arguments that the joint check issue even arises.

It is possible to go after the parties with a narrow focus on the joint check agreement’s obligations. Unfortunately, however, every other argument under the sun is likely to get roped in (workmanship disputes, delay, damages, contract violations, etc.).  When looking to enforce your joint check agreement don’t be naive about these other disputes. Keep them all in mind and come up with your big picture legal plan.