Posts Tagged ‘Good Faith’

Delaware recently revised its payment act, which is now known as the Building Construction Procedures Act (the “Act”) . The Act applies to all services provided on construction projects.

Need to Revise Standard Form Contracts. Of note, the Act mandates that all construction contracts must be governed by Delaware law and all litigation, arbitration, mediation or other dispute resolution procedures must take place in Delaware. For Pennsylvania GCs working in Delaware, if your subcontracts state that Pennsylvania law will govern the subcontract or that any litigation, arbitration, mediation or other dispute resolution procedures will take place in Pennsylvania, the revised Act renders such provisions void and unenforceable. Thus, we recommend that Pennsylvania GCs working in Delaware revise their standard form subcontracts.

Significant Penalties. Be warned, that the revised Act really has some teeth, as it includes significant penalties and attorneys’ fees against parties who wrongfully withhold money in bad faith. Specifically, if it is determined in arbitration or litigation that the owner, contractor, or subcontractor wrongfully withheld money in bad faith, the Court or arbitrator may award the amount determined to be have been wrongfully withheld, plus an amount equal to the amount wrongfully withheld as additional damages. The substantially prevailing party may also be awarded its reasonable attorneys’ fees, arbitration costs and expenses, and, if applicable, expenses for expert witnesses.

Disputed Invoices. Additionally, the Act increases the time for an owner or contractor to dispute an amount stated in an invoice from seven days to fifteen days. However, if written notice is not given within fifteen days of receipt of the disputed invoice, the invoice shall be deemed to be accepted and payment shall be made by the owner or contractor. Nonetheless, despite payment of an invoice, the owner or contractor may still challenge the quality of the work covered by any undisputed invoice.

The attorneys are Harmon & Davies are available to assist you with revising your standard form subcontracts to comply with the revised Act.

This article is authored by attorney Shannon O. Young and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice. Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.





Tags: , , , , , , , , ,
Posted in Construction, Paymet Acts | No Comments »

Under the Pennsylvania Public Works Employment Verification Act (“the Act”), a new law that takes effect on January 1, 2013, public works contractors and subcontractors working on projects (funded at least in part by a public body) with an estimated value of $25,000 or more, will be required to enroll and participate in the federal E-Verify electronic employment eligibility verification system (“E-Verify”).  E-Verify is an internet based system that confirms the legal work authorization status of newly hired employees by comparing information on the employee’s Form I-9 with records on file with the U.S. Department of Homeland Security and Social Security Administration.  Specifically, as a precondition to being awarded a public works contract, the Act mandates that before the execution of the contract, the contractor and its subcontractors provide the contracting agency with a Verification Form, certifying the contractor’s and subcontractor’s compliance with the E-Verify requirement.    

Contractual Language.   The Act also requires that contracts between a public works contractor and its subcontractors contain information regarding the requirements of the Act.  Thus, it is highly recommended that Public Works contractors revise theirs subcontracts before January 1, 2013 to comply with the Act.    

Enforcement of the Act.  To ensure compliance with the Act, the Department of General Services has been granted the authority to conduct random and complaint-based project audits.  The penalties for failing to comply with the Act include monetary fines and debarment from public work. 

Good Faith Defense.  Notably, the Act contains a “Good Faith” defense clause that shields employers from liability if the employer takes adverse action against a newly hired employee in reliance on an E-Verify determination that the individual is not authorized for employment. 

The attorneys at Harmon & Davies are available to assist public contractors with revising their subcontractors to comply with the Act. 

Tags: , , , , , , , , , ,
Posted in Construction, Public Works | No Comments »