Construction & Public Contracts Group, Hinckley Allen, LLP
Alexandra Gordon Associate
Christopher Morog Robert T. Ferguson Partner Partner
The Massachusetts Prompt Payment Act: Payments and Rejections on Private Projects As many of you are already aware, the Massachusetts Appeals Court recently confirmed that Massachusetts’ courts will strictly enforce the payment and rejection requirements of the Massachusetts Prompt Payment Act (PPA) applicable to private projects with a prime contract value of $3 Million or more. If the project falls within the scope of the PPA, then the requirements of the statute apply not only to the prime contract, but also to subcontracts and sub-subcontracts. Contract terms that conflict with the PPA are deemed to be void and unenforceable.
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enerally speaking, the PPA sets strict time limitations for the submission, approval/rejection, and payment of: (1) written applications for periodic progress payments; and (2) written requests seeking an increase in the contract price. In order to reject (in whole or in part) an application for payment or a request for an increase in the contract price, a contracting party must make the rejection in writing, provide the factual and contractual bases for the rejection, and certify that the rejection is made in good faith. Contracting parties that fail to comply with the statutory requirements run the risk that a given application for payment or request for an increase in the contract price may be deemed to have been approved. The Appeals Court addressed the requirements of the PPA in Tocci Building Corp. v. IRIV Partners, LLC, et al. In that case, the project owner attempted to reject requisitions, but did not certify that the rejections were made in good faith. The Appeals Court confirmed that even the most detailed rejection, supported by JULY, 2022
undisputed facts and references to contractual deficiencies, must contain a certification that the rejection has been made in good faith to be effective and excuse non-payment of the requisition. Failure to properly reject a requisition within the time allotted by the PPA results in a requisition that is “deemed approved” and therefore must be paid. However the owner or contractor who makes payment on a requisition that has been continued on page 25
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