Insurance & LiensQuestion 85 of 1632

Which statement about a "joint check agreement" is correct?

a.A promise to pay by check naming the sub and its supplier jointly
b.An arrangement the CSLB must approve before anyone may use it
c.A substitute for the preliminary notice a supplier has to give
d.A device that is available only on public works contracts

Explanation

A joint check agreement is a contract term, not a statute: the owner or direct contractor agrees that payment will be issued on a check made payable to two payees at once — typically the subcontractor together with the supplier or sub-subcontractor behind it — so the lower-tier party must endorse the check and can see for itself that the money arrived. The word that matters in (a) is therefore jointly, not directly. No board approval is involved, so (b) is wrong, and the device is used on private and public work alike, so (d) is wrong. (c) is the dangerous one: the agreement changes nothing about Civil Code §8200, so a supplier that skips its preliminary notice loses its lien and stop-payment rights however the check is drawn.

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