Thought Leadership

The New Jersey Prompt Payment Act (the Act) provides that if a contractor or subcontractor is not paid in a timely manner, they can sue for full payment for any work actually performed. In this unreported case, the Appellate Division held that lack of a retainage payment to a general contractor did not bar payment to the general contractor’s subcontractors, regardless of a condition precedent requiring that the general contractor be paid before the subcontractors. While subcontractors may waive their rights under the Act, any such waiver must be clear and unambiguous to be enforceable. Additionally, a subcontractor’s execution of a partial construction lien waiver is not the effective equivalent of a change to a project’s contractual language, unless additional consideration is exchanged. As is the case with any construction contract, clients should seek counsel’s review of contractual language before contract execution, and counsel need keep in mind the price of failing to pay on time.

^{Case Law Alerts, 1st Quarter, January 2022 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2022 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.}