Several states, including
Georgia’s Licensing Requirement
JR Construction/Electric, LLC (“JR”), a Wisconsin company, entered into an agreement with Ordner Construction Company (“Ordner”) to install electrical systems. At the time of contracting, JR was not directly associated with a
In an effort to comply with the statute’s licensing requirement, JR entered into a joint venture agreement with Moore Electric Company (“Moore”).
The court determined that
Additionally, JR was prohibited from recovering the value of its services under the theories of unjust enrichment or quantum meruit. In the decision, the court stated that where “an express agreement is unenforceable because it violates public policy, the agreement cannot be made legal and binding as an implied contract, by merely praying for a recovery on quantum meruit of a portion of the amount expressly agreed upon.” In other words, JR’s failure to produce evidence that it complied with
New York’s Licensing Requirement
Similarly, licensing requirements in other states have prevented unlicensed contractors from enforcing mechanic’s liens or recovering payments under contract or in quantum meruit. In Vanguard Construction & Development Co., Inc., 879 N.Y.2d 300 (N.Y. 2009), the New York court held that although the homeowner was aware that the contractor was unlicensed and planned to take advantage of such fact, the contractor could not recover any further payments under the contract or in quantum meruit.
New Mexico’s Licensing Requirement
Likewise, in Romero v. Parker, 207 P.3d 350 (N.M. Ct. App. 2009), the New Mexico court held that public policy prevented an unlicensed subcontractor from bringing suit to recover payment for work performed on five different projects. Further, an unlicensed contractor risks having to repay payments already made to him. The court stated that “an unlicensed contractor may not retain payments made pursuant to a contract which requires him to perform in violation of the statute” and entitles a “landowner a full refund.” The general contractor that hired the unlicensed subcontractor filed a counterclaim seeking recovery of payments made to the subcontractor. However, the court denied the general contractor’s counterclaim because the general contractor failed “to furnish and maintain evidence of responsibility.”
Each state has its own contractor licensing requirements. Before performing work in a particular state, ensure that you have complied with and understand that state’s licensing requirements. A failure to fully comply may leave you with an unenforceable contract and no rights to file a lien, enforce a lien, make a claim on a bond, or to receive any payments.
Unenforceable contracts are contracts that have no remedy in damages or specific performance because they arise out of illegal bargains, which are void at their inception. If you take the risk and perform work without a license, in violation of a state statute, not only is the contract unenforceable as to you, you open yourself up to a plethora of other claims. Some states require that you reimburse the property owner any amounts they have paid for work you performed without a license. Additionally, you may be held liable to the property owners, general contractors, subcontractors, insurance companies, and bonding companies for damages for breach of contract, fraud, and indemnification.Don't get caught doing business without a license.
This blog is intended to be solely a source of general information on topics related to construction, contract and commercial law. It is not intended to render legal advice on specific problems. If advice is required to address specific matters please feel free to contact me or another qualified attorney.
Ian C. Clarke