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Em Vs Transtar Case Study

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A.E.M Vs. Transtar, Pay If Paid and Pay When Paid Clauses The court case mentioned within the video discusses a dispute in which the general contractor, A.E.M Electric Services Corp, and the subcontractor, Transtar Electric Inc., challenges a “pay-if-paid” or a “paid-when-paid” clause. A.E.M claims the contract has fallen under the terms pay-if-paid where the subcontractors are not capable of receiving payment unless the owners pay the general contractor, whereas Transtar claims the opposite, pay-when-paid. In two previous court cases regarding A.E.M and Transtar, there was an instance in which A.E.M won the decision within the trial court decision and Transtar won the appellate court’s decision. The sue against the general contractor was represented by the $44,000 that they have not paid to the subcontractor. A.E.M argues the contract in which Jim Silk states that the contract is unambiguous as should be understood as a pay-if-paid clause, Transtar claims that there was not a meeting of the minds which led to the ambiguity of “standard practices”, where I decided on A.E.M’s justification over Transtar because Transtar …show more content…

If we have to argue the ethical and moral decisions here without the context of the contract, the pay-if-paid clause automatically lost the argument, because it’s essentially seizing payment for work. With the context of the contract, the pay-if-paid contract is legally binding because it’s stated clearly of their intentions. Liggett claims that there was no consideration within the contract often because many pay-if-paid contracts favors safety and a shift in risk for the general contractor, it’s not necessarily selfish the way Liggett claims, it was more so A.E.M was being cautious and Transtar agreed and signed the contract even though they were aware of the condition

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