S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  1109

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by  M. of A. HEASTIE, ZEBROWSKI -- read once and referred to
  the Committee on Consumer Affairs and Protection

AN ACT to amend the general business law, in relation to requiring time-
  ly payments and interest owed to contractors

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The general business law is amended by adding a new article
37-B to read as follows:
                              ARTICLE 37-B
            TIMELY PAYMENTS AND INTEREST OWED TO CONTRACTORS
SECTION 806. LEGISLATIVE INTENT.
        807. DEFINITIONS.
        808. PAYMENTS OWED TO CONTRACTORS.
        809. DETERMINATION  OF  ELIGIBILITY  FOR  PAYMENT OF INTEREST ON
               AMOUNTS OWED TO CONTRACTORS.
  S 806. LEGISLATIVE INTENT. FIRMS AND ORGANIZATIONS  THAT  DO  BUSINESS
WITHIN  THE  STATE OF NEW YORK EXPECT AND DESERVE TO BE PAID IN A PROMPT
AND TIMELY MANNER. UNJUSTIFIED DELAYS IN  PAYING  VENDORS,  CONSTRUCTION
CONTRACTORS,  AND  PROVIDERS  OF  SERVICE  MAY DISCOURAGE SUCH FIRMS AND
ORGANIZATIONS FROM DOING BUSINESS WITHIN THE STATE OF NEW YORK  AND  MAY
ULTIMATELY  INCREASE  THE  COSTS  TO  CONSUMERS OF PURCHASING MATERIALS,
EQUIPMENT, AND SUPPLIES;  UNDERTAKING  CONSTRUCTION  AND  RECONSTRUCTION
PROJECTS;  AND  OBTAINING  A  WIDE  VARIETY  OF  PROFESSIONAL  AND OTHER
SPECIALIZED SERVICES INCLUDING THOSE THAT ARE  PROVIDED  TO  PERSONS  IN
NEED.  CONSEQUENTLY,  THIS LEGISLATION SETS STANDARDS FOR THE PAYMENT OF
BILLS INCURRED  BY  CONSUMERS  WITHIN  SPECIFIED  PERIODS  OF  TIME  AND
REQUIRES  INTEREST PAYMENTS IN SITUATIONS WHERE CONTRACT PAYMENTS DO NOT
CONFORM TO THESE STANDARDS. CONSISTENT WITH ACCEPTED BUSINESS  PRACTICES
AND WITH SOUND PRINCIPLES OF FISCAL MANAGEMENT, IT IS THE INTENT OF THIS
LEGISLATION  TO  ENCOURAGE  CONSUMERS TO MAKE PAYMENTS AT LEAST AS EXPE-
DITIOUSLY AS THEY CURRENTLY DO AND FURTHER TO  REDUCE  EXISTING  PAYMENT
PROCESSING TIMES WHENEVER FEASIBLE, WHILE AT THE SAME TIME ENSURING THAT

              

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04939-01-3

A. 1109                             2

THE  CONSUMER  RECEIVES THE QUALITY OF GOODS AND SERVICES TO WHICH IT IS
ENTITLED TO.
  S 807. DEFINITIONS. AS USED IN THIS ARTICLE, THE FOLLOWING TERMS SHALL
HAVE THE FOLLOWING MEANINGS UNLESS OTHERWISE SPECIFIED:
  1.  "CONTRACT"  MEANS AN ENFORCEABLE AGREEMENT ENTERED INTO BY A PRIME
CONTRACTOR AND A CONSUMER.
  2. "CONSUMER" MEANS AN  INDIVIDUAL  OR  INDIVIDUALS  ENTERING  INTO  A
CONTRACT WITH A PRIME CONTRACTOR.
  3.  "BILLING"  MEANS,  IN ACCORDANCE WITH THE TERMS AND DEFINITIONS OF
THE APPLICABLE  CONTRACT, ANY PERIODIC PAYMENT, FINAL  PAYMENT,  WRITTEN
APPROVED CHANGE ORDER OR REQUEST FOR RELEASE OF RETAINAGE.
  4.  "PRIME CONTRACTOR" MEANS A PERSON WHO CONTRACTS WITH A CONSUMER TO
IMPROVE REAL PROPERTY.
  5. "SUBCONTRACTOR" MEANS ANY PERSON  WHO  HAS  CONTRACTED  TO  FURNISH
LABOR,  MATERIALS  OR OTHER SERVICES TO A PRIME CONTRACTOR IN CONNECTION
WITH A CONTRACT FOR IMPROVEMENT OF REAL PROPERTY.
  6. "SUBSUBCONTRACTOR" MEANS ANY  PERSON WHO HAS CONTRACTED TO  FURNISH
LABOR, MATERIALS OR OTHER SERVICES TO A SUBCONTRACTOR IN CONNECTION WITH
A CONTRACT FOR IMPROVEMENT OF REAL PROPERTY.
  7.  "MATERIALMEN" MEANS ANY PERSON WHO HAS CONTRACTED TO FURNISH MATE-
RIALS OR OTHER SERVICES TO A PRIME CONTRACTOR, SUBCONTRACTOR OR  SUBSUB-
CONTRACTOR FOR IMPROVEMENT OF REAL PROPERTY.
  8. "PAYMENT DATE" MEANS THE DATE ON WHICH A CHECK FOR PAYMENT PURSUANT
TO A CONTRACT IS DATED.
  9.  "PROPER  INVOICE"  MEANS  A WRITTEN REQUEST FOR A CONTRACT PAYMENT
THAT IS SUBMITTED BY A CONTRACTOR SETTING FORTH THE DESCRIPTION,  PRICE,
AND  QUANTITY  OF GOODS, PROPERTY, OR SERVICES DELIVERED OR RENDERED, IN
SUCH FORM AND SUPPORTED BY SUCH OTHER  SUBSTANTIATING  DOCUMENTATION  AS
MAY REASONABLY BE REQUIRED.
  10.  "RECEIPT  OF  AN  INVOICE"  MEANS  (A) THE DATE ON WHICH A PROPER
INVOICE IS ACTUALLY RECEIVED BY THE CONSUMER, OR (B) THE DATE  ON  WHICH
THE CONSUMER RECEIVES THE PURCHASED GOODS, PROPERTY, OR SERVICES COVERED
BY THE PROPER INVOICE, WHICHEVER IS LATER.
  11. "REQUIRED PAYMENT DATE" MEANS THE DATE BY WHICH A CONTRACT PAYMENT
MUST BE MADE IN ORDER FOR THE CONSUMER NOT TO BECOME LIABLE FOR INTEREST
PAYMENTS,  PURSUANT TO SUBDIVISION ONE OF SECTION EIGHT HUNDRED EIGHT OF
THIS ARTICLE.
  12. "PRIME RATE" MEANS THE BASIC RATE ON CORPORATE LOANS PUBLISHED  BY
THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.
  S  808.  PAYMENTS  OWED  TO  CONTRACTORS. 1. IF A PRIME CONTRACTOR HAS
PERFORMED IN ACCORDANCE WITH THE  PROVISIONS  OF  A  CONTRACT  WITH  THE
CONSUMER  AND  THE BILLING FOR THE  WORK HAS BEEN APPROVED AND CERTIFIED
BY THE CONSUMER  OR  THE  CONSUMER'S  AUTHORIZED  APPROVING  AGENT,  THE
CONSUMER SHALL PAY THE AMOUNT DUE TO THE PRIME CONTRACTOR FOR EACH PERI-
ODIC  PAYMENT,  FINAL  PAYMENT  OR RETAINAGE MONIES NOT MORE THAN THIRTY
CALENDAR DAYS AFTER THE BILLING DATE, WHICH FOR PERIODIC BILLING,  SHALL
BE THE PERIODIC BILLING DATE  SPECIFIED IN THE CONTRACT.
  2.  EACH CONSUMER SHALL HAVE FIFTEEN CALENDAR DAYS AFTER RECEIPT OF AN
INVOICE TO NOTIFY THE CONTRACTOR OF (A) DEFECTS IN THE DELIVERED  GOODS,
PROPERTY,  OR  SERVICES,  (B)  DEFECTS  IN THE INVOICE, OR (C) SUSPECTED
IMPROPRIETIES OF ANY KIND; AND THE EXISTENCE OF SUCH DEFECTS  OR  IMPRO-
PRIETIES  SHALL PREVENT THE COMMENCEMENT OF THE TIME PERIOD SPECIFIED IN
SUBDIVISION ONE OF THIS SECTION. WHEN  A  CONSUMER  FAILS  TO  NOTIFY  A
CONTRACTOR  OF  SUCH  DEFECTS  OR SUSPECTED IMPROPRIETIES WITHIN FIFTEEN
CALENDAR DAYS OF RECEIVING THE INVOICE, THE NUMBER OF DAYS  ALLOWED  FOR
PAYMENT OF THE CORRECTED PROPER INVOICE WILL BE REDUCED BY THE NUMBER OF

A. 1109                             3

DAYS  BETWEEN THE FIFTEENTH DAY AND THE DAY THAT NOTIFICATION WAS TRANS-
MITTED TO THE CONTRACTOR. IF THE CONSUMER, IN SUCH SITUATIONS, FAILS  TO
PROVIDE  REASONABLE  GROUNDS  FOR ITS CONTENTION THAT A DEFECT OR IMPRO-
PRIETY  EXISTS,  THE  REQUIRED PAYMENT DATE SHALL BE CALCULATED FROM THE
DATE OF RECEIPT OF AN INVOICE.
  3. A PRIME CONTRACTOR, SUBCONTRACTOR OR  SUBSUBCONTRACTOR  MAY,  AFTER
PROVIDING  SEVEN  CALENDAR  DAYS  WRITTEN NOTICE TO THE PARTY FAILING TO
MAKE THE  REQUIRED  PAYMENTS,  SUSPEND  PERFORMANCE  OF  A  CONSTRUCTION
CONTRACT,  WITHOUT  PENALTY  FOR  BREACH OF CONTRACT, UNTIL THE REQUIRED
PAYMENT PURSUANT TO THIS SECTION IS MADE;  PROVIDED  HOWEVER,  THAT  THE
PRIME CONTRACTOR, SUBCONTRACTOR OR SUBSUBCONTRACTOR HAS NOT BEEN PAID AS
REQUIRED BY THIS SECTION, HAS NOT BEEN PROVIDED WITH A WRITTEN STATEMENT
BY  THE  CONSUMER OF THE AMOUNT WITHHELD AND THE REASON FOR WITHHOLDING,
AND THE CONSUMER IS NOT ENGAGED IN A GOOD FAITH EFFORT  TO  RESOLVE  THE
REASON FOR WITHHOLDING.
  4.  A  PROPER INVOICE SUBMITTED BY THE CONTRACTOR SHALL BE REQUIRED TO
INITIATE ANY PAYMENT,  EXCEPT  WHERE  THE  CONTRACT  PROVIDES  THAT  THE
CONTRACTOR  WILL  BE  PAID  AT PREDETERMINED INTERVALS WITHOUT HAVING TO
SUBMIT AN INVOICE FOR EACH SUCH SCHEDULED PAYMENT,  IN  WHICH  CASE  THE
CONSUMER  SHALL  SUBMIT  TO THE REQUIRED PAYMENT DATE WHICH SHALL BE THE
PAYMENT DUE DATE SPECIFIED IN ACCORDANCE WITH THE CONTRACT.
  5. (A) THE RIGHTS, REMEDIES OR PROTECTIONS PROVIDED  BY  THIS  SECTION
FOR  PRIME CONTRACTORS, SUBCONTRACTORS AND SUBSUBCONTRACTORS SHALL BE IN
ADDITION TO OTHER REMEDIES PROVIDED  PURSUANT TO ANY OTHER PROVISION  OF
STATE LAW.
  (B) NO PROVISION OF THIS SECTION SHALL BE  CONSTRUED AS RESTRICTING IN
ANY  WAY  THE  RIGHTS OR REMEDIES PROVIDED BY ANY OTHER APPLICABLE STATE
LAW.
  S 809. DETERMINATION OF ELIGIBILITY FOR PAYMENT OF INTEREST ON AMOUNTS
OWED TO CONTRACTORS. 1. IF A PAYMENT DUE PURSUANT TO THE  PROVISIONS  OF
SECTION  EIGHT  HUNDRED  EIGHT  OF  THIS ARTICLE IS NOT MADE IN A TIMELY
MANNER, THE DELINQUENT PARTY SHALL BE LIABLE FOR  THE  AMOUNT  OF  MONEY
OWED  UNDER  THE  CONTRACT,  PLUS INTEREST AT A RATE EQUAL TO PRIME RATE
PLUS ONE PERCENT. INTEREST ON AMOUNTS DUE PURSUANT TO THIS SECTION SHALL
BE PAID TO THE PRIME  CONTRACTOR, SUBCONTRACTOR OR SUBSUBCONTRACTOR  FOR
THE  PERIOD  BEGINNING  ON  THE  DAY AFTER THE REQUIRED PAYMENT DATE AND
ENDING ON THE DAY ON WHICH THE CHECK FOR PAYMENT HAS  BEEN DRAWN.
  2. ANY CONSUMER WHO IS REQUIRED  TO  MAKE  A  PAYMENT  PURSUANT  TO  A
CONTRACT  AND  WHICH DOES NOT MAKE SUCH CONTRACT PAYMENT BY THE REQUIRED
PAYMENT DATE SHALL MAKE AN INTEREST PAYMENT TO THE PRIME  CONTRACTOR  IN
ACCORDANCE WITH THIS SECTION ON THE AMOUNT OF THE CONTRACT PAYMENT WHICH
IS  DUE, UNLESS FAILURE TO MAKE SUCH CONTRACT PAYMENT IS THE RESULT OF A
LIEN, ATTACHMENT, OR OTHER LEGAL PROCESS  AGAINST  THE  MONEY  DUE  SAID
PRIME CONTRACTOR. A PRO RATA SHARE OF SUCH INTEREST SHALL BE PAID BY THE
PRIME CONTRACTOR, SUBCONTRACTOR OR SUBSUBCONTRACTOR, AS THE CASE MAY BE,
TO  SUBCONTRACTORS AND MATERIALMEN IN A PROPORTION EQUAL TO THE PERCENT-
AGE OF THEIR PRO RATA SHARE OF THE   CONTRACT  PAYMENT.  SUCH  PRO  RATA
SHARE  OF  INTEREST  SHALL BE DUE TO SUCH SUBCONTRACTORS AND MATERIALMEN
ONLY FOR THOSE PAYMENTS WHICH ARE NOT PAID TO  SUCH  SUBCONTRACTORS  AND
MATERIALMEN  PRIOR  TO  THE  DATE  UPON  WHICH INTEREST BEGINS TO ACCRUE
BETWEEN THE CONSUMER AND THE CONTRACTOR. SUCH PRO RATA SHARE OF INTEREST
SHALL BE COMPUTED DAILY UNTIL SUCH  PAYMENTS ARE MADE TO THE SUBCONTRAC-
TORS AND MATERIALMEN.
  S 2. This act shall  take  effect  immediately,  and  shall  apply  to
contracts entered into on or after such effective date.