Question
BuildWell Contractors Pty Ltd ('BuildWell') is the head contractor for a residential development. BuildWell appoints Brikkies Pty Ltd ('Brikkies') under a lump sum contract to
BuildWell Contractors Pty Ltd ('BuildWell') is the head contractor for a residential development. BuildWell appoints Brikkies Pty Ltd ('Brikkies') under a lump sum contract to carry out and complete the masonry works for the residential project by 29 March 2019 for an agreed lump sum contract price of $1.3 million. The contract also contains a bonus clause, which stated that if Brikkies finishes on or before 22 March 2019, Buildwell will pay them a $50,000 lump sum bonus in the final progress payment. According to the payment terms in the contract, the final payment is to be paid 60 days after Buildwell receives Brikkies' final payment claim.
Brikkies completes the masonry works under the contract on 22 March 2019, and claims the promised $50,000 bonus in their final payment claim. Buildwell, however, is experiencing financial difficulties and, 30 days after receiving the final payment claim, sends an email to Brikkies as follows:
We regret to inform you that at present we do not have sufficient funds to pay the full $50,000 bonus. However, we can offer a payment of $22,000 to be paid in accordance with the agreed contractual payment terms (i.e. 60 days after receipt of the final payment claim) upon the condition you agree to waive your right to payment for the remaining $28,000.
a)Advise Brikkies as to whether they should agree to accept the offer of immediate payment in the amount of $22,000. The implications for Brikkies both if they decide to agree or disagree to accept the immediatepayment.
b)How would it differ if Buildwell's email hasstated:
We regret to inform you that at present we do not have sufficient funds to pay the full $50,000 bonus. However, we can offer a payment of $22,000 to be paid immediately upon the condition you agree to waive your right to payment for the remaining $28,000.
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