A subcontractor submits an invoice that includes charges not covered in their contract. How should the general contractor handle this situation?
Correct Answer
B) Pay only the contracted amounts and document the discrepancy
The contractor should pay legitimate charges per the contract and document the discrepancy for resolution. This maintains cash flow while protecting against unauthorized charges and provides a paper trail for dispute resolution.
Why This Is the Correct Answer
Option C represents the most balanced and professional approach to contract administration. By paying only the legitimate contracted amounts, the general contractor fulfills their contractual obligations while protecting against unauthorized charges. Documenting the discrepancy creates an essential paper trail for dispute resolution and demonstrates due diligence in contract management. This approach maintains positive vendor relationships by ensuring timely payment of valid charges while addressing billing errors through proper channels.
Why the Other Options Are Wrong
Option C: Reject the entire invoice until corrections are made
Unilateral deductions from future payments without proper notice and documentation can violate contract terms and Florida prompt payment laws. This approach may constitute breach of contract and could expose the general contractor to legal liability and damage claims.
Option D: Deduct the unauthorized charges from future payments
Paying unauthorized charges sets a dangerous precedent and violates fiduciary responsibility to the project owner. This approach can lead to budget overruns, encourage future billing irregularities, and may constitute breach of the general contractor's duty to manage costs effectively.
Memory Technique
Use 'PDD' - Pay (contracted amounts), Document (discrepancies), Discuss (resolution). Think 'Pay what you owe, question what you don't.'
Reference Hint
Florida Building Code Chapter 1, Section 107 - Construction Documents and Inspections; Florida Statutes Chapter 713 - Prompt Payment Laws
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