Originally posted 2010-01-22 09:00:24.
Contractors are feeling the pinch in today’s financial climate. Payments are being made slowly if at all. Clients unreasonably expect perfection despite the numerous moving parts on a commercial construction project (not to mention the mantra that “Murphy was an optimist”).
In such a climate, getting a check that won’t bounce is a key to staying in business. However, like with everything else in business, be careful before you cash the check.
A case in point is Helton v. Philip A. Glick Plumbing Company, a case just recently decided by the Virginia Supreme Court. In Helton, the homeowner underpaid for the work performed by a plumber and wrote “payment in full” on the memo line of the check and sent the check to the plumber with a letter making it clear that the payment was all the plumber was going to get. Needless to say, the plumber crossed out the “payment in full” language and cashed the check, then sued the homeowner for the balance.
The Virginia Supreme Court held that crossing out this language was not enough to overcome the doctrine of accord and satisfaction that is still alive and well in the Commonwealth of Virginia. The plumber was only entitled to the amount paid by the owner.
The lesson here is that many times construction pros are put in a tough position. Cash the check and risk the remainder of your hard earned money? Don’t cash it and risk not making payroll? In short, be careful and consult with someone knowledgeable in these grey areas of payment law before accepting less than you believe your work is worth.
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Hi Christopher,
Wow. This i great to know. Thank You.
I know this would be different from state to state but in the plumbers home state of virginia were their hands completly tied by this?
Was their no way to, before witnesses and perhaps a notary, create their own legal memorandum which would allow them to cash the check and still be entitled to the rest of their money?
Barry
Barry,
Thanks for the comment. The Court has put contractors in a tough position. It did emphasize the unequivocal nature of the letter accompanying the check. This leaves open the possibility that an equally strong letter back to the homeowner (along with striking the payment in full language) could possibly have allowed the contractor to cash the check without such harsh consequences.
Unfortunately, this case does not give any guidance on that front.