Smith and Roberson's Business Law 16th Edition by Richard Mann,Barry Roberts

Exercise 18

K G Construction Co. was the owner of and the general contractor for a housing subdivision project. Harris contracted with the company to do excavating and earth-moving work on the project. Certain provisions of the contract stated that (a) K G was to make monthly progress payments to Harris, (b) no such ayments were to be made until Harris obtained liability insurance, and (c) all of Harris's work on the project must be performed in a workmanlike manner. On August , a bulldozer operator, working for Harris, drove too close to one of K G's houses, causing the collapse of a wall and other damage. When Harris and his insurance carrier denied liability and refused to pay for the damage, K G refused to make the August monthly progress payment. Harris, nonetheless, continued to work on the project until mid-September, when the excavator ceased its operations due to K G's refusal to make the progress payment. K G had another excavator finish the job at an added cost of $1,450. It then sued Harris for the bulldozer damage, alleging negligence, and also for the $1,450 damages for breach of contract. Harris claims that K G defaulted first, having no legal right to refuse the August progress payment. Did K G default first? Explain.