Parties to construction contracts take notice: the legislature enacted new consequences and contract restrictions to Oregon’s Prompt Pay Acts starting in 2012.
On public improvement contracts first advertised or solicited on or after May 28, 2012, the newly revised Act (a) changes the interest penalty rate for a prime contractor’s failure to make timely payment to subcontractors to 9 percent per annum from the current amorphous federally based rate; (b) requires prime contractors to provide first-tier subcontractors with a standard payment application form intended to clarify payment processing procedures throughout the life of the subcontract; and (c) mandates a 45-day notification period to subcontractors before changes are made to payment processing procedures. [HB 4034; ORS 279C.515; ORS 279C.580.]
On private construction contracts entered into after January 1, 2012, the newly revised Act (a) rejects attempts by any party to contractually force waiver or alteration of a subcontractor’s or material supplier’s rights to receive prompt progress payments within the time required by ORS 701.630; (b) requires private contracts expected to take 60 or more days to complete to conspicuously and expressly identify alternative billing cycles (other than monthly cycles); and (c) limits recovery of attorneys’ fees to the prevailing party in actions “to collect interest” under the Act (rather than the previous broader right to fees in actions “to collect payments or interest”). [SB 384; ORS 701.620 – 701.645.]
If you have not read through your contract payment terms recently, now is a good time to review and revise contract provisions to ensure receipt of prompt payment.