Common use of Grounds for Withholding Payment Clause in Contracts

Grounds for Withholding Payment. A. Owner may withhold payment due Contractor for Defective Work which has not been corrected in compliance with terms of this agreement. B. Owner may withhold payment due Contractor on the filing of a legal Claim against Contractor by any third party if the Claim relates to the subject matter of this contract and (1) May result in a lien on the Project, or (2) May result in a judgment for damages against Owner. Filing of a legal Claim shall not constitute grounds to withhold payment if Contractor has insurance coverage which would prevent loss to Owner from the legal Claim made. C. If Owner withholds any payment under terms of this agreement, Owner will notify Contractor in writing of the amount being withheld, the reason why payment is withheld, and what must be done to release the payment otherwise due. D. Grounds entitling Owner to withhold certain amounts due Contractor under this agreement shall not relieve Owner from the obligation to pay Contractor other amounts then due and shall not relieve Owner of the obligation to pay in full when the reason for withholding payment no longer exists.