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Wickberg Marine Contracting, Inc. v. Trevcon, Inc.

A-350-97T2 (N.J. Super. App. Div. 1998) (Unpublished)

CONTRACTORS; PAYMENT BONDS—When a bidder hires a contractor to perform the bidded work on its behalf, the contractor doesn’t qualify as a beneficiary under the bidder’s payment and performance bond.

In 1993, the New Jersey Department of Environmental Protection solicited bids for dredging the navigation channel in certain bays and creeks. The successful bidder was awarded the contract. The bidder then obtained a payment and performance bond. In this case, the bidder agreed in advance with another contractor that the other contractor would perform all the required work and that the bidder would receive 10% of moneys due under the contract (and would be reimbursed for its out-of-pocket expenses) and that the other contractor would receive the balance. The bidder received installment payments from NJDEP and, after deducting its percentage and expenses, remitted the balance to the contractor. The final payment, however, was retained by the bidder for its own purposes. When this happened, the contractor presented a claim to the surety seeking to collect under the payment and performance bond. The surety refused to pay, arguing that the contractor was not a subcontractor, but rather a substituted principal or joint venturer. The Appellate Division upheld the lower court’s judgment in favor of the surety.


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