Common use of Monies Withheld Clause in Contracts

Monies Withheld. When CITY has reasonable grounds for believing that a meritorious claim exists against CONTRACTOR or CITY arising out of the negligence, error or omission of CONTRACTOR or CONTRACTOR's breach of any provision of this Contract, then CITY may withhold payment of any amount otherwise due and payable to CONTRACTOR under this Contract. Any amount so withheld may be retained by CITY, for that period as it may deem advisable to protect CITY against any loss and CITY may, after written notice to CONTRACTOR, apply such money in satisfaction of any claim(s). This provision is intended solely for the benefit of CITY, and no other person or entity shall have any right against CITY by reason of CITY's failure or refusal to withhold monies. No interest shall be payable by CITY on any amounts withheld under this provision. This provision is not intended to limit or in any way prejudice any other right of CITY.