Prompt Payment Act Damages

posted by Michael Fortney  |  Dec 14, 2009 4:47 PM in Construction Law

The prompt payment law requires contractors to pay lower tier subcontractors or suppliers that portion of the payment to the contractor that represents the work done by the contractor or the supplies provided by the supplier, minus retainage, within ten days of receiving payment for the lower tier subcontractor's work. Ohio Rev. Code 4113.61.

Complying with statutory prerequisites

In order to succeed in a claim under the prompt payment law, the subcontractor or materialman must:

  1. have a valid and enforceable contract claim;
  2. have submitted an accurate invoice to a contractor for payment for work or materials, allowing the contractor a sufficient time to include the invoice in the contractor's invoice to the owner;
  3. establish that the contractor was paid for the invoice submitted after the submission of the subcontractor's or materialman's invoice;
  4. establish that the owner paid money to the contractor for work completed by the subcontractor or for materials delivered by the materialman;
  5. establish that the contractor has refused to timely pay the subcontractor or materialman an amount equal to the percentage of completion allowed by the owner; and
  6. establish that there is no valid reasons for the contractor to withhold any amount necessary to resolve disputed claims involving the work or materials.

Damages available under the prompt payment law

A subcontractor or materialman may recover interest at 18% per annum, costs, and attorneys fees, in the event that a violation of the prompt payment law is established.

Revision History

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