Prompt Payment Legislation - Electrical Contractors Association of ...

1. more efficient, timely and economicalconstruction for the mutual benefit ofowners, architect/engineers, contractors,subcontractors and suppliers; and2. equitable and ethical relations betweengeneral contractors and subcontractors.The three associations have developed aseries of guidelines and forms reflectingconstruction practices that are fair andequitable to owners, general contractorsand subcontractors.Summary of status of promptpayment legislation in theUnited States (July 2011)• Every state in the union but New Hampshirehas enacted prompt payment legislationfor public construction projects.progress draw to a contractor.• A party’s breach of prompt paymentlegislation is tantamount to a breach ofthe bonded contract, which causes thatparty to lose all contract rights againstthe non-breaching contractor/principaland to lose all bond rights againstthe surety.• American states have nearly unanimouslyfollowed the federal government’slead and used the Federal PromptPayment Act as a template for theirpublic construction.• The trend is growing in American statesto enact prompt payment acts for nonpublicor private construction. Massachusettsonly recently passed a promptpayment act for private constructionprojects. A number of states still donot have prompt payment acts for theirprivate construction projects, including:• Colorado• Approximately one-third of the stateshave enacted similar prompt paymentlegislation for private projects.• Basically, the U.S. Federal Prompt PaymentAct requires the project owner/government to pay the general contractorwithin 14 days of a payment applicationbeing submitted.of the ScienceThe Art• If the payment application is for finalpayment on the project, it is due 30 daysafter final acceptance by the owner andsubmittal of the final invoice.• Additionally, the Federal Prompt PaymentAct requires payments be made tofirst-tier subcontractors within sevendays following receipt of payment by thegeneral contractor from the owner.• While individual states’ prompt paymentacts differ from the Federal Prompt PaymentAct and from each other in certainrespects, all of these statutory schemesfollow the same general pattern andrepresent the same fundamental intent.When Sam Eckler helped local clothing workers and manufacturers establish thefirst multi-employer pension plan in Canada, he was on to something.Today, multi-employer plans cover over one million Canadians –with Eckler Ltd. at the forefront of the industry.Our professionals combine their insight into the issues facingtrustees and members, with technical excellence and progressivepractices. The result is inspired solutions for today’s trusteesand administrators.• The owner’s (or, in the case when paymentis due to a subcontractor, the generalcontractor’s) failure to pay in accordancewith the applicable prompt payment actis deemed a breach of contract. One ofthe clearest examples of material breachis when an owner has failed to pay awww.eckler.capensions group benefits communications investment consulting technology administrationA M E M B E R O F A B E L I C A G L O B A LOntario Electrical Contractor11