Generally, contractors are required to be licensed in the state in which they perform work. If not licensed, they may be unable to enforce their construction contracts, and in certain instances, licensing requirements for subcontractors may be more relaxed than those for general contractors.

In B.D. Stephenson Trucking, LLC v. Riverbrooke Capital Partners, LLC, the contractor entered into an agreement with the developer under which the contractor was to perform water and sewer infrastructure work for a new subdivision in Alabama. At the time of the agreement, the contractor did not possess an Alabama general contractor's license (the "License"). Notwithstanding, the contractor believed it could work under the developer's license until the contractor obtained its own License.

In reliance upon this belief, the contractor moved equipment onto the project site and applied for its License. Shortly thereafter, the developer informed the contractor the developer would not honor the agreement. The contractor filed suit, alleging breach of contract.

The developer filed a motion for summary judgment. Among other arguments, the developer argued the agreement was unenforceable because the contractor had not obtained a License and was required to do so.

In addressing the developer's claim, the court noted that it was a crime to engage in the business of being a general contractor without obtaining a License. According to the court, "Alabama courts have taken this principle one step further, declaring that express or implied contracts with unlicensed general contractors are unenforceable." In addition, an unlicensed general contractor cannot meet its requirements under Alabama's statute by associating itself with a licensed general contractor or by obtaining a License after performance of the contract. Thus, the developer was entitled to summary judgment on its no-licensure defense if the developer could demonstrate that (1) the contractor was unlicensed, (2) the cost of the work was $50,000.00 or more and (3) the agreement was for work covered by Alabama's statute.