Contracts & ExecutionQuestion 162 of 1605
If an owner wrongfully withholds an undisputed progress payment from a general contractor, California prompt payment law allows a penalty of:
a.Loss of the contractor's license
b.Triple the contract price
c.2% per month on the improperly withheld amount, plus attorney's fees
d.No penalty; the contractor can only sue for the principal
Explanation
California prompt payment statutes impose a penalty of 2% per month (in lieu of interest) on amounts wrongfully withheld, and the prevailing party in an enforcement action may recover attorney's fees and costs.
Law Reference: Civil Code §8800Practice all 1605 questions free — no signup required.
Related questions on this topic
- A contractor adds a 5% contingency to a job estimated at $200,000 in direct costs. How much money does the contingency add to the estimate?
- On a project with a $250,000 contract, the owner withholds 10% retention from each progress payment. After $150,000 of work has been billed and approved, how much retention has been withheld so far?
- On a private works project, after the owner pays the general contractor a progress payment, the general contractor must pay each subcontractor its share within how many days?
- After a project is satisfactorily completed and accepted on a private works job, the owner must release retention to the general contractor within:
- After receiving retention from the owner, a general contractor on a private works project must pass through each subcontractor's retention within:
- In a construction contract, a "schedule of values" is BEST described as:
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)