Can our Maine construction contract set its own payment timetable?
Twenty days from the owner to the contractor, seven from the contractor down, and only the downstream half is immune from the contract. 10 M.R.S. § 1113 sets the owner side as a DEFAULT: subsection 1 says "[t]he owner shall pay the contractor strictly in accordance with the terms of the construction contract", subsection 2 gives the contractor a right to invoice only "[i]f the construction contract does not contain a provision governing the terms of payment", and subsection 3's twenty days runs "[e]xcept as otherwise agreed", so an owner-contractor payment schedule displaces it. The downstream side does not bend: § 1114 says "[n]otwithstanding any contrary agreement" a contractor must pay a subcontractor or material supplier the amount received for its work "7 days after receipt of each progress or final payment or 7 days after receipt of the subcontractor's or material supplier's invoice, whichever is later", and the same "[n]otwithstanding" governs the interest on a late downstream payment, which runs from the next day at the rate in 14 M.R.S. § 1602-C (the owner-side interest runs from the 21st day at the same rate). Retainage: § 1116 requires release to the contractor within 30 days of final acceptance and payment down the chain within 7 days of receipt, again "[n]otwithstanding any contrary agreement". Who is caught is wider than "construction" suggests: § 1111 defines a construction contract as "any agreement, whether written or oral", defines "work" to include "any design or other professional or skilled services rendered by architects, engineers, land surveyors, landscape architects and construction engineers", and defines "[o]wner" to include "the State and instrumentalities and subdivisions of the State including municipalities, school districts and school administrative districts". The chapter reaches public owners; the only owner-side exclusions are contracts of the Department of Transportation (§ 1112), federal-aid variances (§ 1119) and someone buying materials for work on their own property (§ 1120).
The trap
The timing rules have a documentation trap on both sides. Under § 1115 an owner, contractor or subcontractor who receives a defective invoice "must contact the person submitting the invoice in writing within 10 working days", and "[i]f the contractor or subcontractor does not notify the person submitting the invoice within 10 days, the documentary errors are deemed waived", so a payer who sits on a bad invoice loses the objection. Running the other way, § 1115(2) keeps the clock honest: "[a]ll timely payment requirements of this chapter apply, regardless of the dates invoices are corrected, whenever the person submitting the invoice has completed the work in a timely manner." The obligation most often missed is § 1114(2): a contractor must disclose the owner's payment due date to a subcontractor or supplier BEFORE the subcontract is entered, and if it "fails to accurately disclose the due date", it must pay "as though the 20-day due dates in section 1113, subsection 3 were met", regardless of when the owner actually pays, and "[n]otwithstanding any other provision of this chapter". The payer's own leverage survives: "[n]othing in this chapter prevents an owner, contractor or subcontractor from withholding payment in whole or in part ... in an amount equalling the value of any good faith claims", and § 1116(2) lets a contractor withhold retainage from its subcontractor "in accordance with their agreement" where the owner is not withholding any. But unreasonable conduct around retainage is expressly penalised: § 1116(4) makes a contractor or subcontractor who "unreasonably withholds acceptance of the work or materials or fails to pay retainage" subject to "the interest, penalty and attorney's fees provisions of this chapter", the 1%-per-month penalty of § 1118(2) and the mandatory fee award of § 1118(4), which reads out any contrary agreement. Finally, paying early is not a way out of the chapter: § 1117 permits advance and progress payments but says "[a]ll such payments must be made promptly and are subject to the interest, penalty and other provisions of this chapter."
25 authorities
- statute10 M.R.S. § 1113enactment date not established
The words that state the rule
Except as otherwise agreed, payment of interim and final invoices is due from the owner 20 days after the end of the billing period or 20 days after delivery of the invoice, whichever is later.
- statute10 M.R.S. § 1113enactment date not established
The words that state the rule
The owner shall pay the contractor strictly in accordance with the terms of the construction contract.
- statute10 M.R.S. § 1113enactment date not established
The words that state the rule
If the construction contract does not contain a provision governing the terms of payment, the contractor may invoice the owner for progress payments at the end of the billing period. The contractor may submit a final invoice for payment in full upon completion of the agreed upon work.
- statute10 M.R.S. § 1113enactment date not established
The words that state the rule
Except as otherwise agreed, if any progress or final payment to a contractor is delayed beyond the due date established in subsection 3 , the owner shall pay the contractor interest on any unpaid balance due beginning on the 21st day, at an interest rate equal to that specified in Title 14, section 1602‑C .
- statute10 M.R.S. § 1114enactment date not established
The words that state the rule
Notwithstanding any contrary agreement, when a subcontractor or material supplier has performed in accordance with the provisions of a contract, a contractor shall pay to the subcontractor or material supplier, and each subcontractor shall in turn pay to its subcontractors or material suppliers, the full or proportional amount received for each subcontractor's work and materials based on work completed or service provided under the subcontract, 7 days after receipt of each progress or final payment or 7 days after receipt of the subcontractor's or material supplier's invoice, whichever is later.
- statute10 M.R.S. § 1114enactment date not established
The words that state the rule
Notwithstanding any contrary agreement, a contractor or subcontractor shall disclose to a subcontractor or material supplier the due date for receipt of payments from the owner before a contract between those parties is entered. Notwithstanding any other provision of this chapter, if a contractor or subcontractor fails to accurately disclose the due date to a subcontractor or material supplier, the contractor or subcontractor is obligated to pay the subcontractor or material supplier as though the 20-day due dates in section 1113, subsection 3 were met.
- statute10 M.R.S. § 1114enactment date not established
The words that state the rule
Notwithstanding any contrary agreement, if any progress or final payment to a subcontractor or material supplier is delayed beyond the due date established in subsection 2 or 3 , the contractor or subcontractor shall pay its subcontractor or material supplier interest on any unpaid balance due beginning on the next day, at an interest rate equal to that specified in Title 14, section 1602‑C .
- statute10 M.R.S. § 1116enactment date not established
The words that state the rule
If payments under a construction contract are subject to retainage, any amounts retained during the performance of the contract and due to be released to the contractor upon completion must be paid within 30 days after final acceptance of the work.
- statute10 M.R.S. § 1116enactment date not established
The words that state the rule
Notwithstanding any contrary agreement, a contractor shall pay to its subcontractors or material suppliers and each subcontractor shall in turn pay to its subcontractors or material suppliers, within 7 days after receipt of the retainage, the full amount due to each subcontractor or material supplier.
- statute10 M.R.S. § 1116enactment date not established
The words that state the rule
If an owner is not withholding retainage for a subcontractor's work, a contractor may withhold retainage from its subcontractor or material supplier in accordance with their agreement. The retainage must be paid within 30 days of final acceptance of the work.
- statute10 M.R.S. § 1116enactment date not established
The words that state the rule
If a contractor or subcontractor unreasonably withholds acceptance of the work or materials or fails to pay retainage as required by this section, the owner, contractor or subcontractor is subject to the interest, penalty and attorney's fees provisions of this chapter.
- statute10 M.R.S. § 1118enactment date not established
The words that state the rule
Nothing in this chapter prevents an owner, contractor or subcontractor from withholding payment in whole or in part under a construction contract in an amount equalling the value of any good faith claims against an invoicing contractor, subcontractor or material supplier, including claims arising from unsatisfactory job progress, defective construction or materials, disputed work or 3rd-party claims.
- statute10 M.R.S. § 1118enactment date not established
The words that state the rule
If arbitration or litigation is commenced to recover payment due under the terms of this chapter and it is determined that an owner, contractor or subcontractor has failed to comply with the payment terms of this chapter, the arbitrator or court shall award an amount equal to 1% per month of all sums for which payment has wrongfully been withheld, in addition to all other damages due and as a penalty.
- statute10 M.R.S. § 1118enactment date not established
The words that state the rule
Notwithstanding any contrary agreement, the substantially prevailing party in any proceeding to recover any payment within the scope of this chapter must be awarded reasonable attorney's fees in an amount to be determined by the court or arbitrator, together with expenses.
- statute10 M.R.S. § 1115enactment date not established
The words that state the rule
If an invoice is filled out incorrectly or incompletely or if there is any defect or impropriety in an invoice submitted, the owner, contractor or subcontractor must contact the person submitting the invoice in writing within 10 working days of receiving the invoice.
- statute10 M.R.S. § 1112enactment date not established
The words that state the rule
This chapter does not apply to contracts entered into by the Department of Transportation.
- statute10 M.R.S. § 1119enactment date not established
The words that state the rule
Notwithstanding any provision of this chapter, language at variance to the requirements of this chapter may be included in contracts when that variance is required by any law, regulation or grant agreement conditioning the receipt or expenditure of federal aid.
- statute10 M.R.S. § 1120enactment date not established
The words that state the rule
This chapter does not apply to contracts for the purchase of materials by a person performing work on that person's own real property.
- case2022 ME 5Fortney & Weygandt, Inc. v. Lewiston DMEP IX, LLCMe.decided 2022read it at the source ↗
The words that state the rule
As discussed below, the court did not err in using the “common core of facts” rule to review F&W’s requested attorney fees and expenses under the prompt payment statute. Furthermore, we affirm the court’s application of the “common core of facts” rule and the resulting award of attorney fees and expenses relating to F&W’s contract claims and GBT’s counterclaims and affirmative defenses, including NHD’s fees and expenses.
- statute10 M.R.S. § 1115enactment date not established
The words that state the rule
If the contractor or subcontractor does not notify the person submitting the invoice within 10 days, the documentary errors are deemed waived.
- statute10 M.R.S. § 1115enactment date not established
The words that state the rule
All timely payment requirements of this chapter apply, regardless of the dates invoices are corrected, whenever the person submitting the invoice has completed the work in a timely manner.
- statute10 M.R.S. § 1111enactment date not established
The words that state the rule
"Construction contract" means any agreement, whether written or oral, to perform or to supply materials for work on any real property.
- statute10 M.R.S. § 1111enactment date not established
The words that state the rule
"Owner" means a person or entity having an interest in real property on which work is performed or to which materials for performing work are delivered, if the person or entity has agreed to or requested that work. "Owner" includes successors in interest of the owner and agents of the owner acting within their authority. "Owner" also includes the State and instrumentalities and subdivisions of the State including municipalities, school districts and school administrative districts having an interest in that real property.
- statute10 M.R.S. § 1111enactment date not established
The words that state the rule
"Work" means to build, alter, repair or demolish any improvement on, connected with or beneath the surface of any real property, or to excavate, clear, grade, fill or landscape any real property, to construct driveways, private roadways, highways and bridges, drilled wells, septic systems, sewage systems or utilities, to furnish materials for any of those purposes or to perform labor upon real property. "Work" also includes any design or other professional or skilled services rendered by architects, engineers, land surveyors, landscape architects and construction engineers.
- statute10 M.R.S. § 1117enactment date not established
The words that state the rule
This chapter in no way may be construed to prohibit an owner, contractor or subcontractor from making advance payments, progress payments or from prepaying if agreements or other circumstances make those payments appropriate. All such payments must be made promptly and are subject to the interest, penalty and other provisions of this chapter.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.