Pay-if-Paid Clauses and Shortened Claim Deadlines: Polar Bear Mechanical

Reviewed September 7, 2026.

In Polar Bear Mechanical, Inc. v. Walison Corp., 2017 NY Slip Op 50848(U), the Appellate Term rejected a payment condition that shifted the owner's nonpayment risk to the subcontractor. That ruling did not save the subcontractor's late lawsuit.

The separate deadline still mattered

The agreement expressly severed unenforceable provisions and required suit within six months after an early termination. The court enforced that deadline on the record presented and affirmed dismissal of the claim against the contractor and surety. It also corrected the lower court's jurisdiction analysis: the pleaded claim could be read as one to establish a lien and recover a personal judgment.

Read payment and enforcement terms together

A clause's effect matters more than its label. A condition making payment depend entirely on the owner's payment presents a different issue from a reasonable payment-timing term. Likewise, an invalid payment condition does not automatically invalidate every contractual deadline. Record termination dates, final-application dates, notice requirements and the separate deadlines for liens and bonds in a deadline calendar before waiting for upstream payment.

Kushnick Pallaci PLLC assists clients throughout New York with construction contract drafting and review. Contact 631-752-7100 or vtp@kushnicklaw.com.

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Out-of-State Construction Dispute Clauses: HVS and New York Law

Reviewed September 7, 2026.

In HVS, LLC v. Fortney & Weygandt, Inc., 49 Misc 3d 1143 (2015), Supreme Court, Rockland County, rejected an Ohio dispute-location clause for electrical work on a New York project. The court directed arbitration in New York and stayed the lien-foreclosure action.

This was a trial-court decision, not an appellate ruling. Its rejection of the Federal Arbitration Act argument depended on the record presented, including the local work and absence of evidence establishing the asserted interstate connection. It should not be read as deciding every federal preemption question.

Check current statutory coverage

General Business Law § 757 addresses foreign law and dispute proceedings outside New York for covered construction contracts, subject to its stated exception. The relevant statute is the General Business Law, not the General Obligations Law.

Review coverage under § 756, the contract date, forum language and any applicable federal law. Disputing the forum does not excuse missing a lien, bond or contract deadline.

Kushnick Pallaci PLLC assists clients throughout New York with construction arbitration and dispute resolution. Contact 631-752-7100 or vtp@kushnicklaw.com.

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Suspending New York Construction Work for Nonpayment

Reviewed September 7, 2026.

Stopping work without the right contractual or statutory basis can create a separate breach. Before suspending, document the payment due, the reason for withholding, the contract's notice provisions and the risk to the project.

Statutory rights on covered projects

General Business Law § 756-b permits suspension in specified nonpayment circumstances on projects covered by Article 35-E. It requires advance written notice and an opportunity to cure, generally at least ten calendar days. A subcontractor must provide the required notice to both the owner and contractor. The statutory conditions, including whether payment is undisputed, must be checked.

Use the notice methods required by § 756, which defines written notice using fax and reputable overnight delivery. Do not assume an ordinary email is sufficient. Coverage exclusions mean these provisions do not govern every residential or public project.

Plan the suspension

State the payment default and proposed suspension date precisely. Coordinate site safety, protection of completed work, storage and remobilization records. Preserve lien and bond deadlines independently, and obtain advice before treating a payment dispute as permission to terminate the contract.

Kushnick Pallaci PLLC assists clients throughout New York with construction contract and payment-dispute advice. Contact 631-752-7100 or vtp@kushnicklaw.com.

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New York Public Payment Bonds: Completion and Acceptance Matter

Reviewed September 7, 2026.

This article originally reported a 2011 amendment. The current text of State Finance Law § 137(4)(b) generally bars a statutory payment-bond action brought more than one year after the public improvement has been completed and accepted by the public owner, except as provided in Labor Law § 220-g.

Completion alone and a claimant's last day on the job are not interchangeable with this statutory trigger. Obtain the agency's completion and acceptance records, identify what improvement the bond covers, and record the applicable suit deadline.

Earlier notice obligations still apply

The completion-and-acceptance rule does not eliminate § 137(3)'s separate notice requirements. Certain claimants with a direct contract with a subcontractor but no express or implied contract with the bonded contractor must give the prescribed notice within 120 days after their last covered labor or materials. A claimant should not wait for project acceptance to investigate that obligation.

Confirm whether the bond is statutory, private, federal or otherwise governed by different terms. Sending a demand, negotiating with a surety or filing a lien should not be assumed to extend the bond-action deadline.

Kushnick Pallaci PLLC assists clients throughout New York with public payment-bond claims. Contact 631-752-7100 or vtp@kushnicklaw.com.

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Suspending Construction Work for Nonpayment: Notice Comes First

Reviewed September 7, 2026.

New York's Prompt Payment Act protects qualifying suspension rights on covered private projects. It is not a general authorization to stop work whenever an invoice is disputed. Check the current coverage requirements: the project threshold is an aggregate cost of at least $150,000, with public-project and specified residential exclusions.

Under General Business Law § 756-b, the applicable suspension process requires ten calendar days' written notice and an opportunity to cure. A subcontractor must notify both the owner and contractor. Confirm the statutory grounds, unpaid undisputed amount, notice contents and required delivery method before suspending.

Section 757 makes contractual provisions that defeat the protected suspension right unenforceable. It does not remove the statutory prerequisites. Review contract remedies as well when the Act does not cover the project.

Preserve the project record

Save invoices, approvals, objections, proof of notice delivery and the schedule impact. Address site protection, equipment and restarting work. The statute calls for negotiation of documented actual remobilization costs after a compliant suspension; it does not promise every requested cost. Obtain advice before stopping work so that a payment dispute does not become a termination or abandonment claim.

Kushnick Pallaci PLLC assists clients throughout New York with construction contract review. Contact 631-752-7100 or vtp@kushnicklaw.com.

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Incorporated Prime-Contract Terms and Change Work: CNP Mechanical

Reviewed September 7, 2026.

CNP Mechanical, Inc. v. Allied Builders, Inc., 84 AD3d 1748 (2011), illustrates why a subcontractor should obtain the prime contract incorporated into its agreement.

The Fourth Department reduced awards for four owner-issued construction change directives to the amounts the owner approved under the incorporated terms. It also adjusted interest to the dates payment became due under the valid timing clause. For other extra work, the court upheld recovery because the contractor had waived written-change-order compliance and the proof supported the work's value. The contractor's back-charge and willful-exaggeration counterclaims failed for insufficient proof.

Manage each category of changed work separately

Identify who directed the work, who may approve its price, the required notice and the evidence of authorization. Obtain written confirmation before relying on a departure from the contract. Proof of a waiver in one case does not guarantee recovery on another project.

Review payment conditions under current law rather than treating this historical timing ruling as permission to transfer the owner's nonpayment risk. Keep the prime contract, amendments, directives, pricing submissions and approval records together.

Kushnick Pallaci PLLC assists clients throughout New York with construction change-order disputes. Contact 631-752-7100 or vtp@kushnicklaw.com.

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Construction Indemnity for Third-Party Negligence: Current New York Law

Reviewed September 7, 2026.

The original post discussed a proposal to amend New York's construction anti-indemnity statute. A legislative proposal is not an enacted rule.

The current General Obligations Law § 5-322.1(1) generally prohibits covered construction agreements from shifting liability for the promisee's own negligence to the promisor, with the statute's stated scope and insurance exception. It also expressly permits indemnification for damage caused by another party's negligence, whether or not the promisor is partially negligent.

Review the clause and the facts

Do not assume that an agreement is void simply because a third party contributed to the loss. Identify who seeks indemnity, whose conduct caused the damage, the contractual trigger and any language limiting recovery to the extent permitted by law.

Keep the duty to procure insurance separate from the duty to indemnify. The enforceability of one does not automatically resolve the other. Review these provisions before signing and again when a claim arises, together with the actual policies and endorsements.

Kushnick Pallaci PLLC assists clients throughout New York with construction indemnity and insurance contract review. Contact 631-752-7100 or vtp@kushnicklaw.com.

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Pay-if-Paid Clauses in New York Construction Contracts

Reviewed September 7, 2026.

A subcontract should state when payment is due and who bears the risk that the owner does not pay. In New York, making the owner's payment an absolute condition of a subcontractor's right to payment can violate the protection against advance waiver of lien rights in Lien Law § 34.

The First Department applied that rule in Interbar, Inc. v. Calcedo Construction Corp., 248 AD3d 503 (2026), rejecting an express upstream-payment condition. It also explained that treating the provision as a timing clause would not justify the significant delay at issue.

What to check before signing

• Identify an enforceable payment due date, invoice requirements and procedures for disputed amounts.
• Review owner-payment language alongside claim notices, suspension rights and contractual suit deadlines.
• Identify the project type. The Prompt Payment Act has coverage requirements and exclusions; public contracts and certain residential work follow different rules.
• Preserve lien and payment-bond rights independently. Challenging a payment clause does not extend filing, notice or lawsuit deadlines.

A payment defense can also involve disputed performance, credits or back charges. Invalidating a risk-shifting condition does not establish the amount owed by itself.

Kushnick Pallaci PLLC assists clients throughout New York with construction contract review. Contact 631-752-7100 or vtp@kushnicklaw.com.

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Payment Conditions and Conflicting Suit Deadlines: JC Ryan v. Lipsky

Reviewed September 7, 2026.

In JC Ryan EBCO/H&G, LLC v. Lipsky Enterprises, Inc., 78 AD3d 788 (2010), a subcontract made owner payment a condition of payment and required the subcontractor to pursue lien foreclosure to judgment before suing the contractor. It also imposed a six-month suit deadline.

The Second Department affirmed denial of the motion to dismiss. The payment condition improperly transferred the owner's nonpayment risk. The claim might not become enforceable under that condition before the six-month deadline expired, and the court found the conflicting provisions inseverable.

The practical lesson

This decision addresses the actual risk-shifting language and conflicting deadlines, even though the opinion uses the phrase “pay-when-paid.” It does not invalidate every payment-timing clause or every shortened limitations period. Review severability language and the precise trigger for each deadline. Keep separate calendars for contractual notices, payment-bond claims and lien preservation; a favorable argument about one clause does not excuse missing an independent requirement.

Kushnick Pallaci PLLC assists clients throughout New York with construction contract litigation. Contact 631-752-7100 or vtp@kushnicklaw.com.

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Can a New York Payment Bond Require Exhaustion of Other Remedies?

Reviewed September 7, 2026.

General Obligations Law § 5-322.1(2) generally voids a provision in a bond issued in connection with a construction contract that conditions a subcontractor's or material supplier's payment-bond claim or lawsuit on exhausting another legal remedy first.

The statute is not limited to clauses requiring exhaustion of every possible remedy. A requirement to complete another collection action before proceeding on the payment bond can raise the statutory issue. The section also contains an insurance-contract and workers' compensation exception that should be considered where relevant.

Preserve the bond claim separately

A contractor's bankruptcy or an unpaid judgment against the contractor should not be assumed to be a prerequisite to a covered bond claim. At the same time, this rule does not erase otherwise applicable notice, claimant-eligibility or suit requirements.

Review the bond, any incorporated contract, the type of project and the governing law promptly. Coordinate contract, lien, trust and bond remedies so that pursuing one does not allow another deadline to expire.

Kushnick Pallaci PLLC assists clients throughout New York with payment-bond enforcement and defense. Contact 631-752-7100 or vtp@kushnicklaw.com.

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