A recent court decision in Georgia illustrates how laws enacted
by many states to ensure prompt payment in the construction
industry don't always achieve their purpose. These "prompt
payment" statutes typically require an owner to pay a
contractor (and a contractor to pay a subcontractor) within a
certain number of days and award interest on untimely payments.
These laws can provide important benefits to contractors and
subcontractors, but are often subordinate to contract terms and
therefore less helpful than they might appear.
Georgia's "prompt payment" law provides that an
owner must pay a contractor within 15 days of receipt of a pay
request, and the contractor must pay its subcontractor within 10
days of receipt of payment from the owner. (OCGA §
13-11-4). However, the contractor must have "performed in
accordance with the provisions of [its] contract", and the
subcontractor must have satisfied "the subcontract conditions
precedent to payment." Already we are
