In the past, construction contracts could typically only be terminated if there was a breach of the construction agreement by the owner or contractor. Under such scenarios, litigation often arose concerning whether the termination was proper and whether the contractor might be entitled to lost profits and other damages as a result of the purported unlawful termination. This resulted in costly litigation for both an owner and a contractor if there were potential issues surrounding the termination. In the not-so-distant past, however, a new type of termination clause arose, which gained rapid traction in the industry. This was a “termination for convenience” clause.
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If you are a general contractor or subcontractor, you should know the New Jersey Prompt Payment Act. In general, the purpose of this Act is to encourage prompt payment to contractors for the materials and services they provide on a project by imposing potential sanctions, including counsel fees, should payments which are currently due not be timely and properly tendered. One of the provisions of this Act contains a fee-shifting provision whereby the contractor may be entitled to an award of all counsel fees incurred in seeking the payment it is due from a general contractor or subcontractor.
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In a recent appellate division decision, the appellate court discussed the effect lien waivers might have on a subcontractor’s right to receive payment in full for the work it performed. In this matter, the plaintiff subcontractors had performed all of their obligations under the contract, however, they had also signed partial lien waivers for the defendant general contractor. The general contractor asserted that the execution of its lien waivers barred plaintiffs from receiving the balance which remained outstanding on their invoices pursuant to the contract.
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Continue Reading Lien Waivers and Their Effect on Receiving Payment

In general, it is well known that commercial construction liens must be filed within 90 days of the last date that a contractor provided materials and/or services for a project. Although this time may appear simple at first to calculate, contractors can often make a mistake concerning the last date they provided materials and/or services for the purposes of filing a lien claim. Should a contractor make such an error, there is the possibility that their lien claim may be late due to a particular section of the construction lien statute which is often overlooked.
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In a recent appellate decision, the court discussed the N.J. Prompt Pay Act, a fraudulent inducement claim and piercing the corporate veil with regard to a subcontractor’s claims against a general contractor. In finding in favor of the sub-contractor, the court applied the N.J. Prompt Pay Act and a fraudulent inducement claim in order to pierce the corporate veil of the contractor who had declared bankruptcy.
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In a recent matter before the appellate division, the Court discussed the enforceability of an arbitration clause in a construction contract where the clause did not contain a waiver of the right to file a state court action, nor a waiver of the right of a trial by jury. Furthermore, the court also reviewed the enforceability of the clause due to the fact that the font was less than 10-point print, and thus, was very difficult to read.
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Continue Reading Enforceability of Arbitration Clauses in a Construction Contract