A contractor fails to obtain required building permits before starting work. The property owner discovers this and terminates the contract. Under Hawaii law, what is the contractor's right to payment?
Correct Answer
A) No payment until permits are obtained
Hawaii law generally prohibits payment to unlicensed contractors or those working without required permits until proper licensing and permits are obtained.
Why This Is the Correct Answer
Hawaii law strictly prohibits payment to contractors who work without required permits. This is a fundamental principle designed to protect property owners and ensure compliance with building codes and safety regulations. The contractor must obtain all necessary permits before being entitled to any payment, regardless of the quality or value of work performed. This requirement cannot be waived and serves as a strong deterrent against unpermitted construction work.
Why the Other Options Are Wrong
Option B: Full payment for work completed
Full payment is prohibited under Hawaii law when work is performed without required permits. The contractor has violated fundamental legal requirements by proceeding without permits, which voids their right to compensation regardless of work quality. Hawaii's strict permit compliance laws prevent contractors from benefiting financially from illegal construction activities.
Option C: Quantum meruit for value of work performed
Quantum meruit (payment for reasonable value of services) is not available to contractors who work without required permits in Hawaii. The state's public policy strongly favors permit compliance, and allowing quantum meruit recovery would undermine this policy by enabling contractors to profit from illegal work. The permit requirement is a prerequisite to any payment entitlement.
Option D: Payment minus permit costs and penalties
Simply deducting permit costs and penalties still allows the contractor to profit from illegal work performed without permits. Hawaii law requires complete permit compliance before any payment is due. Partial payment arrangements would weaken the deterrent effect of permit requirements and encourage contractors to proceed without proper authorization, violating public safety policies.
Memory Technique
Remember 'No Permit, No Pay' - Hawaii requires permits BEFORE payment, not after the fact.
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