A recent case out of the federal arena where the contractor claimed Prompt Payment Act recourse due to untimely progress payments from the government explains that the teeth of the Act are fully negated by a “bona fide” dispute.
Most, if not all, jurisdictions, including the federal government, have what is known as a “Prompt Payment Act.” The objective is to ensure prompt payment. If prompt payment is not made, the Prompt Payment Act provides for interest penalties, as well as potentially other costs such as attorney’s fees.
But the thing is, it’s not as simple as untimely payment to support the recourse and interest penalties the applicable Prompt Payment Act affords. And the teeth associated with the applicable Prompt Payment Act are not as sharp as perhaps the party claiming untimely payment prefers.
Mr. Adelstein may be contacted at dma@kirwinnorris.com