Can a subcontractor persue payment from a customer if the contractor never paid?
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A subcontractor is a person who performs work under a contract with a general contractor, rather than the employer who hired the general contractor. Strictly speaking, "subcontracting" is practiced only by a contractor, namely an individual or a company working for another entity under a contractual agreement. If the contractor then hires out some of the work to yet another organization, it is said to have subcontracted the work out. Subcontracting is most common in the construction industry: builders often subcontract plumbing, electrical work, dry walling, painting, and other tasks. But many other sectors engage in contract work as well, most notably government contractors of all kinds. In recent times the term has come to be used in a more general sense to refer to any kind of work contracted or "farmed" out. Outsourcing tasks and functions has become a common tactic used to lower costs. Companies that operate on their own behalf selling goods and services to the public may also engage in contracting or "subbing" some of the work. In such cases no contract is in existence, hence the prefix "sub" is unnecessary; it is often used anyway and thus the commonly used abbreviation, "subbing." Small business owners may be highly experienced in using subcontractors because subs are a natural part of their industry—as in construction. In cases where a large company provides a service, such as a payroll firm, the relationship is again clear and unambiguous—as is, for instance, working with an outside accountant in business for him or herself. Apart from these issues, working with contractors has exactly the same requirements as working with any vendor.
Although an argument for the application of construction or mechanic’s lien laws might be possible (and therefore, the concept of a lien by a subcontractor applying where a release or waiver has not obtained) if the computer software work constitutes installation of a permanent system in a building or structure, construction lien statutes typically do not include computer technicians or software specialists. The relationship between the subcontractor, contractor and customer is likely created by contract and will be governed by contract law. You should review the terms of the contract to determine the subcontractor's rights and obligations regarding payment from the contractor and/or customer.
Contracts are agreements that are legally enforceable. A contract may involve a duty to do or refrain from doing something. The purpose of a contract is to establish the terms of the agreement by which the parties have fixed their rights and duties. The existence of a contract requires an offer, an acceptance of that offer which results in a meeting of the minds, a promise to perform, a valuable consideration, a time or event when performance must be made, terms and conditions for performance, and performance, if the contract is "unilateral". A unilateral contract is one in which there is a promise to pay or give other consideration in return for actual performance. A bilateral contract is one in which a promise is exchanged for a promise. A contract may be express or implied. An express contract is one, whose terms are stated in words. An implied contract is one, the existence and terms of which are manifested by conduct. In most cases contracts can be either written or oral, but oral contracts are more difficult to prove and in most jurisdictions the time to sue on the contract is shorter. Contracts are mainly governed by state statutory and common law and private law. Private law generally refers to the terms of the agreement between the parties, as parties have freedom to override many state law requirements regarding formalities of contracts.
A legal action for breach of contract arises when at least one party's performance does not live up to the terms of the contract and causes the other party to suffer economic damage or other types of measurable injury. The injury may include any loss suffered by the plaintiff in having to buy replacement goods or services at a higher price or of a lower quality from someone else in the market. It may also include the costs and expenses incurred by the plaintiff in having to locate replacement goods or services in the first place. A lawsuit for breach of contract is a civil action and the remedies awarded are designed to place the injured party in the position they would be in if not for the breach.
Remedies for breach of contract include money damages, restitution and specific performance. A money damage award includes a sum of money that is given as compensation for financial losses caused by a breach of contract. Parties injured by a breach are entitled to the benefit of the bargain they entered, or the net gain that would have accrued but for the breach. The type of breach governs the extent of damages that may be recovered. If the breach is a total breach, a plaintiff can recover damages in an amount equal to the sum or value the plaintiff would have received had the contract been fully performed by the defendant, including lost profits. If the breach is only partial, the plaintiff may normally seek damages in an amount equal to the cost of hiring someone else to complete the performance contemplated by the contract. Restitution is a remedy designed to restore the injured party to the position occupied prior to the formation of the contract. Parties seeking restitution may not request to be compensated for lost profits or other earnings caused by a breach. Instead, restitution aims at returning to the plaintiff any money or property given to the defendant under the contract. Specific performance is an equitable remedy that compels one party to perform, as nearly as practicable, his or her duties specified by the contract. Specific performance is available only when money damages are inadequate to compensate the plaintiff for the breach.
A release gives up a right, such as releasing one from his/her liability for harm or damage that may occur from performing under a contract, or participating in an activity. A release generally gives up the signing party's (the releasor's) right to sue the person or entity requesting the release (the releasee). The terms of the release document govern the scope of actions that the released party is immune from liability for.
