Tennessee: Major Breach of Contract by General Contractor.

6 months ago

Tennessee: Major Breach of Contract by General Contractor.
What to do when you are the subcontractor?

Chief Legal Officer Levelset

That’s a very broad topic, with a large number of potential paths forward. Generally, parties in the construction industry have recourse through a mechanics lien or bond claim filing (provided the prerequisites have been met) in addition to the “normal” remedy of filing a lawsuit with respect to the breach.

To the extent that the breach of contract involved nonpayment (or improperly slow payment), a mechanics lien or a bond claim may be asserted to secure the amount due. Tennessee does, however, require certain notices to be provided in order to retain the right to file a lien. Whether a mechanics lien or bond claim applies generally relates to the nature of the underlying project. If the project was a private project – a mechanics lien is the likely remedy. If the project was any project on publicly owned property, a bond claim is appropriate.

For private projects, parties other than the GC must provide a notice of nonpayment for each month in which labor or materials were furnished to the project for which the claimant remains unpaid. This notice must be provided within 90 days from the end of each such month. The lien itself must be filed within 90 days of the completion of the work.

On public projects, there is no “preliminary” notice required, but the bond claim must be made after the claimant’s final furnishing of labor or materials to the project, but before 90 days have passed since the completion of the project.

In addition to these remedies, there is also the ability to file a lawsuit. A lawsuit can be filed specifically for breach of contract, and can also contain additional causes of action – such as failure of the GC to adhere to the prompt payment requirements set forth by Tennessee law.

It would likely help to have a local attorney look over your situation – as there are any number of potential remedies that may be appropriate given how broad your situation has been described. I hope you are able to resolve the issue.

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