Peacock Construction Co. v. Modern Air Conditioning, Inc.
District Court of Appeal of Florida, Second District · 1976 · Contracts
Contractsconstruction contractsubcontractfinal paymentcondition precedentabsolute promise to payreasonable timeowner nonpayment
Facts
A general contractor and a subcontractor entered into a written subcontract for heating and air conditioning work on a condominium development. The contract stated that final payment would be made within 30 days after completion of the subcontract work, written acceptance by the architect, and full payment by the owner. It was undisputed that the subcontractor completed its work and requested final payment, that the contractor did not pay, and that the contractor had not been fully paid by the owner. The dispute centered on whether the owner's payment was a condition precedent to the contractor's obligation to pay the subcontractor.
Issue
Whether the subcontract provision stating that final payment would be made within 30 days after completion of the subcontract work, written acceptance by the architect, and full payment by the owner made the owner's payment a condition precedent to the general contractor's liability to the subcontractor.
Rule
A subcontract provision stating that final payment will be made within a stated time after completion of the subcontractor's work, acceptance, and payment by the owner is not, without more, a condition precedent to the contractor's liability. Instead, such a provision is construed as an absolute promise to pay, with payment merely postponed for a reasonable time after the subcontractor completes the work and requests payment.
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One of 10 multiple-choice questions for this case. Pick an answer to see why.
Summit Bay Builders, a general contractor in Tampa, entered into a written subcontract with Elena Ruiz Plumbing for piping work on an apartment project. The subcontract stated that final payment would be made "within 21 days after completion of the subcontract work, approval by the project engineer, and payment by the owner." Elena completed the work, obtained the engineer's approval, and sent a written demand for final payment, but the owner had not paid Summit Bay.
If Elena sues Summit Bay for the unpaid balance, which is the best analysis?
Explanation. The majority rule adopted in the opinion is that a subcontract provision stating final payment will be made within a stated time after completion, acceptance, and owner payment does not, without more, create a condition precedent. Instead, it is an absolute promise to pay, and owner payment merely affects timing. Because Elena completed the work and requested payment, Summit Bay owed payment within a reasonable time. (Derived from Peacock Construction Co. v. Modern Air Conditioning, Inc. (n.d.).)