Boise, ID asked in Business Law, Collections and Construction Law for Texas

Q: Is a Texas City entity required to act as surety for sub-contractors on projects under $50,000 with no Bond in place?

City of Princeton, TX awarded a contract for $49,720 (no bond required) to their vendor. The vendor hired my company to do the whole wireless project for $45,500. We completed the project and provided all the hardware. The city paid the vendor, the vendor has refused to pay us. The city claims they are not liable and the wireless system we installed is theirs because they paid for it. We have also found out the vendor is has not been a legal entity in Texas since Feb 2020.

1 Lawyer Answer
John Michael Frick
John Michael Frick
  • Construction Law Lawyer
  • Frisco, TX
  • Licensed in Texas

A: No, a city is not required to act as surety for subcontractors. You have a valid cause of action for breach of contract against the person or entity you contracted with.

There are numerous things that could be in that subcontract to protect you from that person being paid by the City and then skipping out without paying you. That's not the City's fault. If appropriate protections are not included in your contract, that's the fault of whomever negotiated the contract on your company's behalf.

Teri A. Walter agrees with this answer

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