Prompt Payment Law

General Business Law Section 756 (and the sections that follow it), commonly known as the Prompt Payment Act, establish requirements for how soon a construction contractor or subcontractor must be paid and allow expedited arbitration in the event that prompt payment is not made for qualifying projects.

Not all projects however fall under the requirements of the PPA, and the act specifically limits its application to non-public projects, having specific square footage and residential unit limitations, and does not apply to reconstruction, alteration, demolition or relocation of an existing structure.

Reviewing the available remedies in the Prompt Payment Act, which include the imposition of interest and referral to arbitration, the court observed that “nothing in General Business Law § 756–b provides that a contractor’s failure to timely disapprove or make payment on an invoice prevents the contractor from contesting, acts as a waiver of a contractor’s ability to contest, or constitutes an admission that the contractor owes the invoiced sum.”

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