Bret decided to enlarge the fishpond in his backyard. He contracted with a general contractor, Conan. Conan subcontracted with Darson to do the excavation and with Ericson to do the plumbing. Conan's own workers did the masonry work. Bret made "progress payments" to Conan, since Conan said such payments were necessary to pay his workers and subcontractors. Bret learned that the workers and subcontractors had not been paid and Conan had used the payments to pay debts unrelated to the job on Bret's pond. Which of the following best describes Bret's position?

A) Because of the doctrine of privity of contract, Bret will not face any liability whatsoever.
B) If Bret held back the 10% required by statute from his payments to Conan, but then later paid it out despite liens having been filed against his property, Bret would still face no liability as he technically complied with the legislation.
C) Bret will be liable for all unpaid amounts because the work was on his land and for his benefit.
D) If Bret held back the 10% required by statute from his payments to Conan, his obligation would generally be limited to the amount of that holdback.
E) Bret had no obligation to hold back any amount of the payments made to Conan as the hold back requirement doesn't apply to progress payments.

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Amber Boesch · Accepted Answer

Final Answer : D, Explanation :  Bret's obligation to the workers and subcontractors would generally be limited to the amount of the holdback if he complied with the statutory requirement to withhold a percentage of the payment due to the contractor. This is a common provision in construction law to ensure that subcontractors and workers can be paid if the general contractor fails to do so.

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