Gulf Liquids New River Project, LLC v. Gulsby Engineering, Inc.
356 S.W.3d 54 | Texas Court of Appeals, 1st District (Houston) | 2011
What This Case Means for Subcontractors
A Texas court ruled that when a project owner breaches a construction contract by failing to pay, the owner cannot hide behind contractual procedural requirements or termination-for-convenience clauses to reduce what it owes. The contractor won over $300 million in damages for work performed and approved changes. This case establishes that an owner's breach strips away its right to enforce strict contract procedures against the contractor.
Key Takeaways
- •If an owner stops paying, don't let them use contract technicalities (like change order procedures or termination clauses) to deny you payment for work you've already done and they've approved.
- •Document all work performed and get written approval for changes—this evidence protects you when an owner tries to escape payment obligations.
- •A breaching owner loses its contractual shields; you can pursue damages for the full value of your work, not just what the contract's payment terms allow.
When an owner breaches a building contract it relinquishes its contractual procedural rights.
Frequently Asked Question
Can an owner use a termination-for-convenience clause to avoid paying me for work I've already completed?
No. Once an owner breaches the contract by failing to pay, it loses the right to enforce termination clauses and other procedural requirements against you. You can recover the full value of approved work and changes, regardless of what the contract says about termination rights.
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