In order to speed up this operation and ensure that payment will be made throughout the chain, the parties enter into a joint cheque agreement. All parties declare that any payments made by the General Contractor to the Subcontractor for the cost of the Supplier`s equipment must also be in writing to the Supplier. Therefore, the supplier or contractor of the lowest level is protected from the possibility that the intermediate level contractor will receive a payment and not pay it. It also protects the general contractor, who could be open to a bond claim if payment has not been received for certain types of projects, or the owner of the land who would otherwise be open to a mechanical deposit right filed by the equipment supplier. As a result, the motivation of the general contractor or developer to sign a common check is usually quite low. This is the reason why these parties generally do not want to create an additional obligation through a pooled cheque agreement. In the absence of a joint audit agreement, the main contractor pays the subcontractor for the work at the end of the work. The subcontractor turns around and pays the supplier for the supplies of building materials that participated in the work. Ideally, all parties are paid, but of course, there are inefficiencies and risks that interrupt the smooth debacle of construction payments.

An example of a joint construction industry audit agreement would be for the prime contractor or general contractor to agree to jointly sign a cheque to the first stage subcontractor and that subcontractor`s equipment suppliers. It is possible to follow the parties by focusing on the obligations of the pooled cheque agreement. Unfortunately, any other argument under the sun should get involved (processing disputes, delays, damages, violations, etc.). If you want to enforce your pooled check agreement, don`t be naïve about these other disputes. Keep them in mind and develop your overall legal plan. We always request a joint audit agreement in our markets with Hawaiian contractors. Usually we have a general, sub-supplier (our company) and have a JCA between 3 of us. If we only work under the general, we can always have a JCA and that. Subcontractors and others with credit problems are known to falsify a general contractor`s or developer`s signature on a pooled check agreement. You should understand that this is in the industry and it is a good practice to send an email or make a call to the general contractor or developer to confirm that they have indeed signed the pooled check agreement and that they understand their obligations.

To put it simply, a common cheque is a cheque that is paid to two or more parties. A pooled cheque agreement is a contractual agreement where by which a party agrees (or authorizes) to make payments in the form of common cheques. If you think that your pooled check agreement requires the paying party to pay you, when in reality it only gives the permission of the paying party, you may have a hard time getting paid if the paying party doesn`t make a common check…