Failure to Pay a Lower-Tier Subcontractor Can Support Termination

Reviewed September 7, 2026.

In American Curtainwall, Inc. v. NTD Construction Corp., 83 AD3d 597 (2011), the First Department affirmed dismissal of breach-of-contract and quantum-meruit claims.

Documents attached to the complaint contradicted the claimed wrongful termination. Nonpayment of the lower-tier subcontractor justified termination under the agreements. The plaintiff's refusal to pay even after an offer to reverse termination also supported the finding that it had waived the contractual cure period. The written contracts barred quasi-contract recovery for the same subject matter.

Respond to a payment default with the contract in hand

Review the lower-tier payment obligation, amounts actually due, disputed performance, cure notices and the evidence supporting any deduction. Upstream nonpayment is not automatically a defense to an independent payment duty.

The case does not establish that every invoice must be paid despite a valid dispute or that cure notices can routinely be skipped. Termination and waiver are fact-sensitive. Document payment decisions and evaluate contract, trust-fund and statutory duties before withholding money or ending a subcontract.

Kushnick Pallaci PLLC assists clients throughout New York with construction contract litigation. Contact 631-752-7100 or vtp@kushnicklaw.com.

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A Quarterly Contract and Payment Checklist for New York Contractors

Reviewed September 7, 2026.

A quarterly review is a useful opportunity to find unresolved changes, overdue invoices and approaching claim deadlines. The same checks should also occur when a project changes direction or payment stops.

1. Review the complete contract file. Keep signed agreements, amendments, incorporated specifications, bonds and insurance records accessible. Identify notice recipients, delivery methods and time limits for claims, delays and disputed changes.
2. Resolve undocumented changes. Record the instruction, authorized representative, added scope, price and schedule effect. An instruction from someone on site does not necessarily establish authority to bind the owner. Follow the contract’s change and claim procedures and preserve supporting labor, material and equipment records.
3. Reconcile invoices and waivers. Check billed amounts, approved changes, retainage and payments against the ledger. Review release language and specifically reserve unresolved claims where appropriate. Lien Law § 34 limits advance lien waivers but allows certain payment-related waivers and releases of filed liens.
4. Calendar separate remedies. Mechanic’s liens, bond claims, contract notices and lawsuits have different requirements. Do not wait until quarter-end if a filing or service deadline may be approaching. Keep evidence of qualifying work and deliveries.
5. Use the agreed dispute process. An initial decision, meeting or mediation may be required before arbitration or litigation. The executed contract and applicable law control; no single edition of a standard form governs every project.
6. Assess nonpayment before stopping work. Review contractual and statutory suspension rights, required notices and safe demobilization. An unjustified work stoppage can create a separate default even when money is disputed.

Assign responsibility for each unresolved item and a follow-up date. A short, documented review is most useful when it results in timely notices, complete records and a clear plan for the remaining work.

Kushnick Pallaci PLLC assists clients throughout New York with construction contract review and payment-risk planning. Contact 631-752-7100 or vtp@kushnicklaw.com.

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Read the Documents Incorporated into Your Construction Contract

Reviewed September 7, 2026.

A short subcontract may incorporate a much longer prime contract, general conditions, drawings, specifications and addenda. Obtain the actual documents before signing. An unfamiliar document title or form number is not enough to understand the obligations.

Build a complete contract set

• Confirm the edition, date and amendments of each referenced document.
• Compare scope, exclusions, schedule, insurance and change-order requirements.
• Check which document controls if terms conflict.
• Identify notice recipients, delivery methods and deadlines.
• Review payment, indemnity, dispute-resolution and termination language directly.

Do not assume every prime-contract clause automatically flows down through a general reference. Whether a particular provision is incorporated depends on the wording and applicable law. Ask for specific clarification of procedural obligations that are intended to bind the subcontractor.

Keep the agreed versions with the executed contract and give the project team access to the requirements it must administer. Later addenda or revised drawings should be tracked so that price and time consequences are addressed before the work changes.

Kushnick Pallaci PLLC assists clients throughout New York with construction contract drafting and review. Contact 631-752-7100 or vtp@kushnicklaw.com.

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Contractor Risks in AIA A201: Notices, Disputes and Damages

Updated September 7, 2026. An AIA form number is the starting point for contract review. The edition, completed owner-contractor agreement, supplementary conditions and project amendments determine the actual obligations. This overview discusses the standard A201–2017 framework.

Check the dispute-resolution selection

Using A201 does not, by itself, mean every dispute must be arbitrated. For example, A101–2017 § 6.2 permits the parties to select arbitration, litigation or another method. Its default is litigation if no different method is selected or subsequently agreed in writing.

Review the applicable initial-decision and mediation steps, any exceptions and the selected binding process together. Starting the wrong proceeding or missing a required preliminary step can complicate an otherwise valid claim. Kushnick Pallaci PLLC assists with construction arbitration and related contract disputes.

Do not use one notice deadline for every event

The AIA's explanation of A201–2017 distinguishes claims arising before the correction period ends from later claims. The former generally involve a 21-day notice requirement under Article 15; the latter are not subject to that same 21-day rule. Other provisions can impose different requirements: the 2017 concealed-or-unknown-condition provision uses a 14-day reporting period.

Check the specific trigger, recipient, delivery method and supporting information in the signed documents. An ordinary project email may not satisfy a formal claim-notice requirement. Do not plan on excusing a late notice through an assumed waiver or informal conversation.

Read the actual damages waiver

A201–2017 § 15.1.7 contains a mutual consequential-damages waiver. Its treatment of contractor profit expressly distinguishes anticipated profit arising directly from the work. A waiver therefore should not be summarized as eliminating every lost-profit claim or every form of delay recovery.

Review the categories waived, amendments, direct-damage claims and any liquidated-damages provision together. The AIA's consequential-damages overview and the firm's discussion of consequential damages in construction claims provide background.

Turn the contract into a working checklist

Before work begins, record the notice addresses, change-order procedure, payment requirements, insurance and bond obligations, termination provisions and claim deadlines. Keep that checklist with the complete executed contract and update it when the parties sign a modification.

Kushnick Pallaci PLLC provides construction contract drafting and review for project-specific risk allocation.

This article provides general information. An older A201 edition or amended contract may produce a different result.