The Prompt Payment Act: Is It At Odds With Public Policy?

Time for the Prompt Payment Act

Is the prompt payment act at odds with public policy? In both general litigation and construction litigation, courts generally give parties great freedom to contract. Thus, New York’s policy is to enforce arbitration agreements in construction contracts.[i] Conversely, New York courts do not usually force parties into arbitration unless their contract expressly requires it.[ii]

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Alternative Dispute Resolution An Option For Construction Contractors Under NY’S Prompt Payment Act

 

Perhaps the most common construction-related dispute is the refusal of a party to make payment to its contractors or subcontractors. While litigation is the traditional avenue for resolving such disputes, methods of alternative dispute resolution such as arbitration and mediation are enjoying growing importance in the field of construction law.

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Subcontractor’s Arbitration Action Stayed by Supreme Court

The Supreme Court, New York County, recently clarified the impact of contractual language specifying litigation as the forum for resolution in the subcontract, and impact of New York’s Prompt Payment, providing for arbitration of disputes where it applies.

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Violation of the New York Prompt Payment Act Does Not Bar Defenses

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.

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