Opinion ID: 3058650
Heading Depth: 1
Heading Rank: 3

Heading: Capital Computer’s Subcontract

Text: It is undisputed that the prime contractor originally approached a relatively new company, Code 4 Systems, Inc. (“Code 4), to become the subcontractor to 3 complete the fiber optic network for the fire alarm project. Code 4 needed money up front to take on the project but was unable to secure advance funding through a factoring company1 . Code 4 contacted Capital Computer, with whom Code 4 had worked on many other projects in the past. Capital Computer, being a more established company that completed electronic and computer hardware installation projects around the country, was able to secure funding through the factoring company. Capital Computer and Code 4 made arrangements with the prime contractor for Capital Computer to become the subcontractor for the project and sub-subcontract all the work to Code 4. Code 4 agreed to pay Capital Computer 4% of the invoices and all the fees of the factoring company. The terms of the subcontract were agreed upon by the prime contractor, Capital Computer, and Code 4. Under the subcontract, Capital Computer agreed to install a fiber-optic network for the fire alarm system on behalf of the prime contractor. With the knowledge and consent of the prime contractor, Capital Computer hired out the entire scope of work to Code 4. As required under the subcontract, Capital Computer maintained insurance for the benefit of the prime contractor and agreed to indemnify the prime contractor for losses resulting from 1 The factoring company was to buy Code 4's accounts receivables at a discounted price and pay Code 4 in advance of completing the project. 4 the work.