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Prime Contractor Default Released Subcontractor Termination; Subcontractors

Sunday, November 02, 2003 05:46 pm

Prime Contractor Default Released Subcontractor Termination; Subcontractors

A Georgia court has ruled that a project owner's termination of a prime contract for default released a subcontractor of any further obligations under the subcontract.

The DeKalb County Board of Education awarded a contract to Latco Construction Co., Inc. to construct a high school building. Latco furnished payment and performance bonds issued by Carolina Casualty Insurance Co. and Everest Reinsurance Co. as co-sureties.

Latco subcontracted the mechanical, HVAC and plumbing work to Ragan Mechanical Contractors, Inc. The subcontract contained the following paragraph 15: "Should the [Board of Education] [...]

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