Common use of Monies Withheld Clause in Contracts

Monies Withheld. When the Owner has reasonable grounds for believing that: a. Contractor will be unable to perform this contract fully and satisfactorily within the time fixed for performance; or b. A meritorious claim exists or will exist against the Contractor or the Owner arising out of the negligence of the Contractor or the Contractor's breach of any provision of this contract; then The Owner may withhold payment of any amount otherwise due and payable to the Contractor under this contract. Any amount so withheld may be retained by the Owner for that period as it may deem advisable to protect the Owner against any loss and may, after written notice to the Contractor, be applied in satisfaction of any claim described here. This provision is intended solely for the benefit of the Owner, and no other person or entity shall have any right or claim against the Owner by reason of the Owner's failure or refusal to withhold monies. No interest shall be payable by the Owner on any amounts withheld under this provision. This provision is not intended to limit or in any way prejudice any other right of the Owner.