Subcontractor Non-performance. Who pays?

[Nathan C.]

Hi BP,

I'm in a bit of a pickle and this opened up another question:

When you hire a GC and their subcontractor does work wrong or does not complete the contract, does your GC require you to pay for the wrong work? What about if the sub doesn't complete the work? Does your GC require you to pay for the half-done job when the sub's task is not done and must be restarted?

Although I'd like to learn about your experiences with the above, I originally was hoping for some advice on a particular situation: 

In my investment county, if the utilities has been off for 1 year, to turn on the utilities (power in this case), you must have an electrical contractor perform a safety inspection, perform any minor repairs, pull a permit, have the city inspect the electrical, finalize / close the permit, then you can call the utility company.

I have been talking to a GC for a property that is in escrow. She said she can help with the safety and be there with the electrical contractor (EC). I agreed and she said the EC wants $400. I sent a check (it has not made it to her yet). She called / scheduled the EC (agreed to $400 for this task), went to EC appointment, she said the EC employees came, gave her a list of minor repairs and said that they would call back to provide a price. Now it deviates from what was planned: the EC calls the GC and says that they cannot perform the job and will be sending her a bill for the inspection. The bill is $238 and they will not complete the work. Worse yet, she wants me to pay that $238 while she finds someone else. She says if I don't pay her, she will have to pay the $238 regardless. 

At this point, this does not seem like my responsibility since she vetted the contractor and had faith in them. In my view, I am paying for a safety inspection and did not agree to a change in instructions. I told her to send me the $400 quote that they sent her BEFORE the job. I have not told her that I am considering not paying because I want to know what others would do in this situation. What do you think? What would you do?

By the way, the first few questions were not to drive home a point; I asked them because I am genuinely curious now that I had this issue what happens if other issues occur when more $ is on the line.