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A recent Florida case has demonstrated the risk for subcontractors when they fail to take timely action after the denial of a claim by the contractor. Hubbard Construction Co. v. Jacobs Civil, Inc., 969 So. 2d 1069 (Fla. App. 2007).

The subcontract stated that the contractor’s decision was “final and conclusive” unless the subcontractor demanded arbitration within twenty (20) days (of the denial of the sub’s request for additional payment). The Court of Appeals found that the sub’s failure to demand arbitration within the twenty (20)-day period prevented it from taking legal action to recover the alleged payment due.

This case illustrates the need for timely action when a party like the architect or contractor denies a claim, particularly when such a contract is signed.