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Conditions Precedent Don't Necessarily Make Payment An 'if' Proposition

Monday, November 30, 2009 03:15 am


Payment -- Surety

Sloan Company v. Liberty Mutual Insurance Co.

U.S. District Court for the Eastern District of Pennsylvania

2009 U.S. Dist. LEXIS 75955 (August 26, 2009)

In Pennsylvania at least, contractors will need to redraft contracts to strengthen clauses that make payments to subs conditioned on payment received from owners. Here's why: General contractor Shoemaker Construction Company (Shoemaker) hired Sloan & Company (Sloan) as a drywall and carpentry subcontractor on a $90.7 million project for Isle of Capri Associates, LP (Capri). The subcontract named Sloan as a potential claimant under Shoemaker's surety bond, issued by Liberty Mutual Insurance Company (Liberty Mutual). After Shoemaker had substantially completed construction, it sued Capri for breach of contract, alleging that Capri had not paid for the work. Sloan notified Liberty Mutual that since Shoemaker had not yet paid it [...]

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