Payment disputes between owners and contractors and contractors and subcontractors arise frequently in connection with commercial construction projects. Such disputes often result in time-consuming and costly litigation between the parties. In 2003, the New York state legislature enacted a remedial legislative scheme known as the Prompt Payment Act (the PPA) which was intended to provide some clarity to such disputes—and afford certain protections to contractors and subcontractors who are not being paid despite having provided services as required pursuant to construction contracts. As detailed below, the legislative scheme was intended to, among other things, facilitate resolution of disputes arising between owners and contractors and contractors and subcontractors in connection with certain commercial construction projects. Recent authority interpreting the PPA has shown that courts are more than willing to enforce the statute’s provisions to ensure a speedy resolution of disputes.
The PPA, which first became effective in 2003, is contained in §§756-758 of Article 35-E of the General Business Law. The stated “policy and purpose” of the PPA is “to expedite payment of all monies owed to those who perform contracting services pursuant to construction contracts.”
