business law Case name issue risk reduction

McMurtry Developments Corp. made arrangements to build an apartment block for Defoe Enterprises Ltd. for $2.5 million in May 2000. McMurtry hired 27 sub- contractors to construct the building in the course of 14 months of construction. The parties' contract stipulated that by April 30, 2001, the sum of $2.3 million would have been paid, providing that by that point all work had been completed except for exterior painting, cleanup of the site, and landscaping. (The contract stipulated that if all the work had been done that point, then the remaining amount owing would be paid.) In fact, as of March 20, 2001, all the work on the contract had been done. Two sub-contractors, Mendoza Brothers Painters and Schmidt's Commercial Landscaping, had not been paid anything for what they did: McMurtry owed $45,000 to the former and $32,000 to the latter as of March 20. On April 15 Mendoza filed a lien at the Land Title Office against the property in question; on April 25 Schmidt filed its lien against the property. On April 30, Defoe Enterprises paid McMurtry $200,000. On May 3 Defoe learned of the liens that had been placed on the property; on May 4 McMurtry advised all of its creditors that it was going into receivership. McMurtry Developments Corp. made arrangements to build an apartment block for Defoe Enterprises Ltd. for $2.5 million in May 2000. McMurtry hired 27 sub- contractors to construct the building in the course of 14 months of construction. The parties' contract stipulated that by April 30, 2001, the sum of $2.3 million would have been paid, providing that by that point all work had been completed except for exterior painting, cleanup of the site, and landscaping. (The contract stipulated that if all the work had been done that point, then the remaining amount owing would be paid.) In fact, as of March 20, 2001, all the work on the contract had been done. Two sub-contractors, Mendoza Brothers Painters and Schmidt's Commercial Landscaping, had not been paid anything for what they did: McMurtry owed $45,000 to the former and $32,000 to the latter as of March 20. On April 15 Mendoza filed a lien at the Land Title Office against the property in question; on April 25 Schmidt filed its lien against the property. On April 30, Defoe Enterprises paid McMurtry $200,000. On May 3 Defoe learned of the liens that had been placed on the property; on May 4 McMurtry advised all of its creditors that it was going into receivership