In Pennsylvania, contractors and subcontractors can be paid under a number of theories of the law. Under common law theories, (which is where there is not a specific law or statute and the law is essentially made by the Courts), a contractor or subcontractor may pursue a breach of contract claim and/or an unjust enrichment claim. A breach of contract claim is where there is an offer, acceptance and consideration (i.e. payment) and one of the parties fail to live up to their obligations under the contract. The contract, under most circumstances, can either be in writing or be oral. An unjust enrichment claim is where one of the parties benefits from a situation but refuse to live up to their obligations. Unjust enrichment claims are often made where there is a question as to whether or not there is an enforceable contract.
Another method of payment for subcontractors is the Contractor and Subcontractor Payment Act. In 1994, Pennsylvania passed this law which requires timely payment to contractors and subcontractors, remedies and damages. So long as the contractor or subcontractor fulfills its obligations under a contract, under the Act, there is a requirement that payment be made within twenty (20) days. After twenty-seven (27) days, interest automatically begins to accrue at the rate of 12% per year.
There are also provisions under the law which require timely payment of subcontractors by general contractors. If a subcontractor performed its obligations under the contract with the general contractor, he is entitled to timely payment. The general contractor is obliged to disclose to a subcontractor before a subcontract is executed, the due date for the receipts of payment from the property owner. If the disclosure is not made, then the general contractor is required to make payment as if the owner had paid within 34 days regardless of whether the owner actually paid or not.
Pennsylvania law assesses a 12% per year penalty and attorneys’ fees for violations of the Pennsylvania Contractor and Subcontractors Payment Act. View the Pennsylvania Contractor and Subcontractors Payment Act. If you are a contractor or a subcontractor or family members or friends are contractors or subcontractors and wish to discuss any of the remedies available for non-payment, contact the law firm Patberg Law Firm at (412) 232-3500 and visit our website at www.pcglawfirm.com. Submissions can be made by e-mail as well through firstname.lastname@example.org.