Paul Peter Nicolai
Prompt Payment Act Noncompliance Waives Defenses
Updated: Apr 12, 2021
A contractor requested seven progress payments on a construction project which were not paid. The construction manager did not follow the requirements of the prompt payment act.
The contractor argued that failing to follow the act meant there was no defense against payment. The construction manager argued that while the law applied, it did not mean there was no defense.
The court ruled the payments were owed because there was no defense.
Why This Is Important... Not only did the court rule that the act applied and made the requirement for payment absolute, but it also ruled that the law needed to be specifically complied with.
Any rejection of a payment request must be timely, must include an explanation of the factual and contractual basis for the rejection and must include a certification that the rejection was being made in good faith.
Because these requirements were not met, any objections to payment under the contract were waived.