STOP WORK STATUTE

3- Using the Stop Work Option

How valuable is the right to stop work? For smaller contracts, probably not very. If you are not being paid, and if you have a good relationship with the Owner, because it’s a small contract and you are likely dealing directly with the Owner, then you will know when the Owner is having financial difficulty. If that is the case, you can probably work out some agreement to suspend the work rather than going through the effort of the Stop Work notification.

The more likely situation is on larger projects when the Owner stops making progress payments. On those types of projects, the Owner will always have some stated reason, however frivolous it may be, for not paying you. In that case, you cannot satisfy the key statutory element for stopping work; there’s no dispute over the entitlement to payment.

The stop work option is not something that should be done on impulse and without consultation with legal counsel. If it is done correctly, it can be effective. After all, if you are not being paid, you are financing the project for the Owner. If the Owner goes bust and there is no payment bond, you may be getting pennies on the dollar, if anything at all, and getting it long after you performed the work. Better to call the Owner’s bluff.

Conversely, from the Owner’s perspective, if you do not satisfy all the requirements in the statute, or if you don’t do the steps correctly, you may be in material breach if you pull off the project. The ball will then be in the Owner’s court and you will have an even bigger problem getting paid, if you get paid at all.