One of the most difficult problems in New Jersey construction law for contractors and subcontractors is getting paid. Fortunately, a powerful remedy exists in the New Jersey Prompt Payment Act. A recent appellate court decision examined the New Jersey Prompt Payment Act in the case of Jo-Med Contracting Corp. vs. City of Linden.
The City of Linden contacted Jo-Med to submit a bid for emergency repair work on approximately 20 feet of sewer repair, together with approximately 30 feet of related curb replacement. Jo-Med submitted a bid for $25,000 based on the job description provided by the City engineer; the bid stated that the cost would be higher if Jo-Med ran into unforeseen problems not apparent in the City’s description, in which case it would bill the City on a time and materials basis. Jo-Med was awarded the contract. The City’s engineer told Jo-Med’s owner that he would “work with him for additional charges to finish the work.”