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Heed Your Paramount Contractual Duty Others' Lesser Violations Won't Negate Your Breach

Tuesday, November 04, 2008 04:03 pm

 
Heed Your Paramount Contractual Duty -- Others' Lesser Violations Won't Negate Your Breach

A subcontractor attempted to escape liability for withholding services based on the prime contractor's failure topay an upfront down payment. But a district court found the former infraction more egregious than the latter.

In preparing a bid for a City of Vernon, California water tower upgrade project, AA-1 Services, Inc. (AA-1) relied on a $93,000 bid, the lowest it received, from subcontractor Pittsburgh Tank & Tower Company, Inc. (Pittsburg Tank). Pittsburgh assured AA-1 the bid was accurate despite the low price. However, a month after the parties had agreed to a subcontract, Pittsburgh Tank requested an additional $157,000 -- bringing the total price to $250,000 -- to proceed with the project work. (The increase was due in large part to bid miscalculations regarding California labor wage rates; Pittsburgh Tank had originally and mistakenly used lower, Kentucky wage rates).

The City of Vernon refused to raise the project price, Pittsburgh Tank refused to perform the work, [...]

 
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