1. Case Name, Citation, and Court: Pace Construction Corporation v. OBS Company, Inc., 531 So.

2d 737, Web 1988 Fla.App. Lexis 4020 (Court of Appeal of Florida) 2. Key Facts: A. Shumann Investments, Inc. Hired Pace Construction Corporation, a general Contractor, to build Outlet World of Pasco Country. B. Pace hired OBS Company, Inc., a subcontractor, to perform the framing, drywall, insulation, and stucco work in the project. C. Shumann refused to pay Pace D. Pace refused to pay OBS. E. OBS sued Pace to recover payment 3. Issue: Who Wins? 4. Holding: Pace wins the lawsuit and does not have to pay OBS. Until a condition precedent is satisfied, the other terms of the contract are not enforceable. In most subcontract agreements, payment by the owner to the contractor is not intended to be a condition precedent to the contractors duty to pay the subcontractor. In order to properly shift the risk to the subcontractor, the subcontract must unambiguously express such an intention. In this case, the subcontract clearly states that payment from the owner shall be a condition precedent to the contractors obligation to make final payment to the subcontractor. Accordingly, the court held that OBS must bear the risk of nonpayment by the owner. 5. Courting Reasoning: 1. Judgment in favor of OBS because it found that the risk of nonpayment by the owner was not shifted to OBS. 2. The court found that OBS general contractor did not have to make its final payment and that OBS sureties were not liable to Pace for final payment bond because the risk of nonpayment by the project owner had been contractually transferred to OBS.

6. My Reasoning:

In this case, the subcontract clearly states that payment from the owner shall be a condition precedent to the contractors obligation to make final payment to the subcontractor. Accordingly, the court held that OBS must bear the risk of nonpayment by the owner. I think the court made the right decision.