Based on ruling 84085 of the Eretz Hemdah-Gazit Rabbinical Courts

Case: The defendant (=def), a contractor, arranged with the plaintiff (=pl), an electrician who works as a subcontractor, to provide the electrical work in multiple projects of public buildings. The contracts for the project set out that the payment terms would be based on a schedule of quantities (one is paid according to the amount of an element done, times its price per unit) and based on “pay when paid” (the contractor pays the subcontractor right after the client (=cl) pays the contractor for that element of work). Toward the end of the projects, disputes arose about the amount of money due to pl for his work, in light of the related pay def received from cl. [We will deal with elements of the case in installments.] Pl claims that he did all of the work necessary for Project #1, and therefore he should receive the full amount (1,187,000 NIS) minus a small amount to be given after a tofes 4 (certificate of occupancy) is issued – he has received only 870,000 NIS. Def refuses to pay more, since cl paid him only 85% of the electricity elements of the work and pl has not proven he deserves more based on the number of units he has handled. Pl responds that since def himself changed his payment terms with cl to be “lump sum” (not per unit), this should also apply to def’s payment to pl. Regarding the work on Project #2, cl paid 37,000 NIS directly to pl to complete work. Def claims that this money should be reduced from the amount due to pl from def.

Ruling: Although it is not clear from the contract whether the payment to pl becomes lump sum if def receives according to lump sum from cl, communications between the two sides indicate that def understood that pl would no longer have to receive confirmation from cl’s inspector of how many units he handled.

Since pl is to receive based on “pay when paid,” we must see how much cl paid def for the line items of electricity. Overall, def received payment on 89% of the project, but on electricity elements only 82%. Cl’s inspector testified that the percentage determined for each element is inexact (i.e., for convenience sake, def could have received a little more than deserved on one element in return for less than deserved for another). Beit din decided therefore to give pl half of the difference between the numbers (85.5%). Based on this, pl deserves another appr. 75,000 NIS for this work.

Project #2: A representative of cl testified that the payment that cl paid pl directly was not in lieu of what they would have normally paid through def. Therefore, there is no need to recalculate that which is due to pl from def in regard to Project #2.

We will continue with final elements of the dispute next time.