NEW JERSEY’S “PROMPT PAYMENT ACT” IS A POWERFUL TOOL FOR CONTRACTORS
Under New Jersey's Prompt Payment Act, N.J.S.A. 2A:30A-2, where a contractor has performed in accordance with the provisions of a contract, the owner must make payment to the contractor within 30 days after the billing date for the work performed. Subcontractors are protected even further and must be paid by the general contractor within 10 days after the billing date for the work performed. If payment is not timely made, contractors and subcontractors may seek the amount owed plus interest at a rate equal to the prime rate plus 1%. The Act also allows for an award of "reasonable costs and attorney fees" if the contractor or subcontractor prevails in litigation. In a recent published decision, the Appellate Division reiterated that the award of attorney's fees and costs to a prevailing contractor or subcontractor does not have to be proportionate to the actual damages recovered. JHC Industrial Services v. Centurion Cos., 469 N.J. Super. 306 (App. Div. 2021). A copy of the Appellate Division's decision can be found here. In sum, the Act and its attorney fee-shifting mandate provide a strong weapon to contractors and subcontractors in litigation. If you are a contractor, subcontractor or owner having issues with your commercial or residential construction project, please call NDG trial attorney Ray Went at (609) 927-1177.