Construction Law Blog
Recent case-law, statutory developments, articles and news impacting
the construction industry from the law firm Babst Calland
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The Babst Calland Construction Law Blog contains articles published by the attorneys at Babst Calland to provide timely legal and business information on issues important to the construction industry.
Tagged: Pipeline construction
- Any contract provision purporting to waive rights afforded under CASPA is unenforceable unless waiver of the right is expressly permitted by CASPA (for example, CASPA permits parties to modify by contract the CASPA right to interest at a rate of 1% per month).
- For contracts lacking a provision permitting suspension of work for nonpayment, contractors and subcontractors now have a statutory right to suspend work for nonpayment under the following conditions:
- Payment has not been made within the period of time required by the contract or the statutory period set by CASPA, whichever is applicable;
- After 30 calendar days have passed since payment was due, written notice of the nonpayment is sent via email or postal service to the person who owes the payment or their authorized agent; and,
- After 30 calendar days since the written notice of nonpayment was sent, written notice is sent via certified mail (to the person who owes payment or his/her authorized agent) of the intent to suspend performance in 10 calendar days if payment is not made.
- Thus, under this statutory right, work may be suspended no earlier than 70 days after payment was due.
- Parties can contract for a shorter period of time to suspend performance after nonpayment. Conversely, any suspension of work provision that provides for a longer period of time (or does not permit suspension in the event of nonpayment) is unenforceable.
- Good faith withholding of payment now expressly requires written explanation of the reason for the withholding within 14 days of receipt of an invoice.
- Most notably, the Act expressly provides that failure to provide a written explanation within 14 days will constitute a waiver of the right to withhold and require payment of the invoiced amount in full. As always, the amount of the withholding must be reasonable (i.e. a reasonable estimate of the cost to correct the deficient work or the damages sustained).
- These written notice of deficiencies requirements must also be followed for retainage to be withheld beyond 30 days of final acceptance of the work; otherwise, the right to withhold retainage is waived.
- Delay of payment due to an error in an invoice is now expressly prohibited. CASPA has always required written notice of invoice errors to be sent within 10 working days of receipt of an invoice. The Act now makes it clear that, once the notice of the error is received by person who sent the mistaken invoice, payment of the correct invoice amount must be made when due regardless of whether (or when) the invoice is corrected.
- Finally, contractors and subcontractors now have the express right to payment of retainage upon substantial completion if they post a maintenance bond for 120% of the retainage amount.
Tagged: CASPA, Industry news
Tagged: Construction Contracts, Construction Economics, Industry news, Payment Bond, Performance Bond, Subcontractors, Surety
Tagged: Construction Contracts, Mechanics' lien, Subcontractors
Tagged: Proposed Legislation, Public Construction Projects
Tagged: Contract Clauses, Lien Law, Pipeline construction, Public Construction Projects, Subcontractors, Surety
- Once 30 calendar days have passed since the end of the billing period, the contractor/subcontractor must provide written notice to the owner/contractor, via e-mail or postal service, stating payment has not been made.
- When an additional 30 days have passed since that notice, the contractor/subcontractor must provide written notice, via certified mail, stating that the contractor/subcontractor intends to suspend work in 10 calendar days.
Tagged: CASPA, Construction Contracts, Contract Clauses, Industry news, Subcontractors
- A contractor or subcontractor may not contractually waive CASPA rights;
- Failure to provide written notice of a deficiency item results in a waiver of the right to withhold for the deficiency and requires payment of the invoice in full;
- If withholding for a deficiency item, payment for all non-deficient work must still be made;
- If a party receiving an invoice alleges the invoice contains an error, the party must pay the correct invoice amount on the date payment would otherwise be due;
- A party seeking release of retention may post a maintenance bond for 120% the amount retained to obtain release of retention;
- Withholding retention for longer than 30 days after “final acceptance of the work” will qualify as an improper withholding unless the appropriate notice requirements are followed;
- Withholding requirements also apply to subcontractors’ sub-subcontracts with lower-tier subcontractors; and
- Compliance with the notice requirements for withholding based upon deficiencies is necessary for the withholding to “not be deemed to have been wrongfully withheld.”
Tagged: CASPA, Contract Clauses, Industry news, Proposed Legislation, Subcontractors