Reviewed September 7, 2026.
The governing-law clause determines which law the parties select; the forum clause identifies where they must litigate or otherwise resolve a dispute. Those provisions deserve review before a New York construction contract is signed.
For contracts covered by the Prompt Payment Act, General Business Law § 757(1) invalidates provisions selecting another state's law or requiring litigation, arbitration or another dispute-resolution proceeding in another state. The statutory restriction expressly excepts contracts with material suppliers.
Check coverage and the dispute provision together
Section 756 defines covered construction projects and exclusions; the current aggregate project threshold is $150,000. Public projects and specified residential work are excluded. Do not assume the restriction applies to every agreement involving a New York building.
Arbitration provisions also require review under applicable federal arbitration law. The statute's wording alone is not a substitute for evaluating enforceability in the particular transaction. Identify the parties, project, selected forum, arbitral rules and incorporated documents, and address an objection promptly rather than ignoring a demand filed elsewhere.
Kushnick Pallaci PLLC assists clients throughout New York with construction contract review. Contact 631-752-7100 or vtp@kushnicklaw.com.
Attorney Advertising. General information, not legal advice.
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