Basis for Withholding Payment Clause Samples
The "Basis for Withholding Payment" clause defines the circumstances under which one party may legally withhold payment from another under a contract. Typically, this clause outlines specific conditions such as incomplete work, defective performance, or failure to provide required documentation that justify delaying or reducing payment. For example, if a contractor fails to meet agreed-upon milestones or deliverables, the client may withhold a portion of payment until the issues are resolved. The core function of this clause is to protect the paying party from financial loss due to non-performance or breaches, ensuring that payments are only made when contractual obligations are properly fulfilled.
Basis for Withholding Payment. Notwithstanding anything contained in Section 2.1, Landlord shall be entitled to withhold payment to the Contractor in the event: (i) the Landlord reasonably determines that the work does not conform to the plans and specifications; (ii) the Landlord reasonably determines that the work is defective or deficient; (iii) the Contractor does not present adequate documentation as required in the Work Agreement; (iv) a mechanic’s lien is placed against the work or the Building or Project, or a lien is threatened by any party for the Cable Installation or the Cost Overage (as defined in the Work Agreement); (v) the Landlord has obtained evidence that any party has not been timely paid, (vi) the Tenant or its Contractor fails to strictly comply with each and every requirement of “Landlord’s Construction Rules” (Exhibit F to the Lease); or (vii) the Landlord reasonably determines that the percentage completion in the applicable draw request is inaccurate. Furthermore, in the event Tenant is at any time during construction of the Tenant Improvements in material default of the Lease, Landlord shall so notify Tenant and Contractor in writing (the “Default Notice”), and Landlord may withhold future payments to Contractor from the Escrow Account.
Basis for Withholding Payment. The Owner may withhold any payment due to the Contractor, in whole or in part, if in the Owner's opinion such payment should be withheld in order to reasonably protect the Owner from loss because of: (a) defective Work not remedied; (b) third party claims; (c) reasonable evidence of the probability of the filing of the third party claims; (d) the failure of the Contractor to pay subcontractors or suppliers; (e) the determination that the Work cannot be completed for the unpaid balance of the Contract Sum; (f) damage to the Owner or to another contractor; (g) the determination that Substantial Completion of the Work will not be achieved prior to the Completion Date; (h) the failure of the Contractor to perform the Work in accordance with the Contract Documents; or (i) the breach of this Agreement or any Contract Document. Owner will detail in writing the factual basis for the proposed withholding to the Contractor, and Contractor shall have ten (10) days in which to respond.