All Seasons Window & Door Manufacturing, Inc. v. Red Dot Corp.
181 S.W.3d 490 | Texas Court of Appeals, 6th District (Texarkana) | 2005
What This Case Means for Subcontractors
All Seasons hired Red Dot to build a metal building but withheld the final payment over a $5,000 dispute about construction delays and quality. The trial court ordered All Seasons to pay Red Dot $143,800 plus interest, but disagreed on the interest rate. The appeals court ruled that the contract allowed 18% interest (the legal maximum), not 10%, and that interest started accruing when construction finished in October 2001. This matters because it shows courts will enforce maximum legal interest rates in construction contracts and won't let payment disputes excuse full payment obligations.
Key Takeaways
- •Include explicit interest rate language in your contracts—if you don't specify a rate, courts may apply the legal maximum (18% in Texas), which could work against you if you're the one owing money
- •Withholding final payment over a partial dispute can backfire; you'll likely owe the full amount plus interest and attorney's fees, making the dispute far more expensive
- •Interest accrues from the date work is completed, not from the date of dispute or lawsuit, so delays in resolving claims cost you money
The contractual interest rate should have been eighteen percent, not ten percent.
Frequently Asked Question
What interest rate will a court apply if my construction contract doesn't specify one?
In Texas, courts will apply the maximum legal interest rate allowed by law, which is 18%. Interest starts accruing from the date work is completed, not when a dispute arises. To avoid surprises, always specify your interest rate clearly in the contract.
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