What can we do if we have a problem with a subcontractor who we’ve paid but is not doing the work they are supposed to do?

UPDATED: Oct 1, 2022

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What can we do if we have a problem with a subcontractor who we’ve paid but is not doing the work they are supposed to do?

I have a small business that subcontracts out the manufacture of air pollution control equipment designed by us that we sell to industry. Right now, I have 2 jobs in a shop which I have used for years but apparently is having financial problems. They have fallen horribly behind on their delivery dates and keep asking us for more money to keep their workers, buy supplies and pay rent even though we have nearly paid them in full. For one of the jobs they are also holding about $50,000 worth of equipment that we had purchased and shipped to the job to be installed in with our equipment they are building. What rights do we have to pull the equipment we bought out of their shop and the unfinished equipment that they are still working on if they are paid in full? Also, it seems like they are strolling the job just so that we keep them in business since they do not work full 8-hour days right now.

Asked on July 8, 2019 under Business Law, New Jersey


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You have no right to simply go there and take anything in their possession: such an action would be at a minium trespassing and breaking and entering or burglary. What you can do is, if they have violated the terms of the agreement (whether written or oral) with you by not turning over things you have already paid for or not completing work on time, is file a lawsuit against them on one or more of several grounds (e.g. "conversion," which is a kind of theft of materials entrusted to another; breach of contract; fraud) for one or both of monetary compensation (e.g. for the value of what they holding, or a return of monies paid) and/or a court order that they turn over certain things to you. For the amount of money at stake, you would be well advised to retain an attorney to help you.

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