Louisiana Construction Contracts Guide & FAQs

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Lousiana Contracts FAQs

Louisiana Construction Contracts Overview

Louisiana Construction Contracts


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PayIfPaidEnforceable
Pay-If-Paid is Enforceable

Pay-if-paid clauses are enforceable in LA if the clause contains clear and unequivocal language.


PayWhenPaidisValid
Pay-When-Paid is Enforceable

Pay-when-paid clauses are enforceable in LA as a timing mechanism setting a reasonable time for payment.


Payment Timing May Not Be Modified By Contract

On Lousiana public works projects, prime contractors must be paid within 45 days of submitting a pay app/completion of the project. All other payments must be made within 14 days of receipt of funds.


Retainage May Cannot Be Modified by Contract
Maximum Retainage Cannot Be Modified

Retainage on public projects in Louisiana cannot exceed the statutory limits of 10% or 5%; depending on the total project cost.

A construction contract outlines each party’s obligations, rights, and remedies on a project. But although the language in specific contract clauses is typically negotiable, Louisiana has certain rules that govern what the agreement must include — and what is prohibited.

Keep in mind that, while Louisiana’s rules for construction contract terms are written into state law, the courts determine how strictly those laws should be interpreted — and those interpretations can change.

On this page, you’ll find resources, legal information, and answers to frequently asked questions about construction contracts and payment terms in Louisiana.

Construction contract provisions in LA

While Louisiana generally allows construction parties to set the terms of their agreement, there are some laws that regulate specific types of contract provisions. Any contract clause that contradicts the law is invalid and unenforceable.

“No lien” clauses

The Louisiana courts have held that a waiver of lien rights by contract (no-lien clauses) is not enforceable. The rationale being that in order to be able to waive rights, the rights must already exist. Since no lien rights exist at the time of contracting, they cannot be waived in advance.

Contingent payment clauses
There are two types of contingent payment clauses: pay-if-paid and pay-when-paid, both of which are enforceable provisions under Louisiana law. A pay-if-paid clause is only enforceable if the language clearly and unequivocally expresses an intent to make the receipt of payment from a third party as a condition precedent to payment. If not, the clause will be treated as setting a reasonable time for payment.

Payment timing clauses

On private projects (with the exception of residential projects), the Louisiana prompt payment laws only regulate the timing of payments to subcontractors. Payments to the prime contractor will be determined by the terms of the contract. As for all other payments down the contracting chain, once payment is received, payments must be released within 14 days.

All payments on public projects are governed by Lousiana’s prompt payment statutes. Payments to the prime contractor must be made within 45 days after the public entity’s receipt of a pay application or completion of the project. All other payments must be made within 14 days of receipt of funds. None of these payment deadlines may be modified by the terms of the contract.

• See: Louisiana Prompt Payment Guide & FAQs

Retainage limits

Louisiana does not regulate the amount of retainage on private construction projects. The terms of the contract between the parties will dictate the amount to be withheld and the timing of its release. On public projects, no more than 10% may be withheld on projects costing less than $500K, and no more than 5% may be withheld on projects that exceed $500K.

LA construction contract requirements

Any contractor that is licensed or registered with the Louisiana State Contractor Licensing Board must provide in their contract the contractor’s name, contractor licensing number, classification, and certificates evidencing the amount of liability insurance carried, and proof of workers’ compensation coverage.

Other types of construction contract requirements

In addition to the requirements listed above, if the project involves a home improvement contract whose total price falls in the $1,500 to $75,000 range, the contract must also contain the complete agreement between the parties, a clear description of any other contract documents, a detailed description of the work to be performed and the materials to be used on the project, and the total amount to be paid under the contract. If the agreement is a time and materials or a cost-plus contract, then the contract should provide an estimated approximation of the costs. Also, the contract must be signed by both parties.

Lastly, if the home improvement contract involves roof repair or replacement to be paid by the owner’s property or casualty insurance provider, the contract must also include a notice in 10pt, boldface type informing the owner of the right to cancel the contract if all or part of the repairs won’t be covered by the insurer within 72 hours. The contract should also include a Notice of Cancellation that may be detached and used by the homeowner.

Construction Contracts FAQs in Louisiana

Construction contracts and payment terms are highly regulated in Louisiana. It can be confusing to figure out when payments must be made, how to make them, and how to best protect your company from expensive problems. Here are some frequently asked questions that come up with construction contracts and payment terms on Louisiana jobs

Louisiana Construction Contracts FAQs

Can you waive lien rights by contract in Louisiana?

No, the use of so-called “no-lien clauses” is not allowed under Louisiana law.

The LA Supreme Court has held that a “waiver” occurs only when there is an existing right. Under this holding, a waiver of lien rights in a contract would be unenforceable, as there would be no exiting lien rights at the time the contract is entered into.

Do I need a written contract to file a Louisiana mechanics lien?

There is no explicit statutory requirement to have a written contract for a claimant to have the right to file a lien in Louisiana. However, there must be an “enforceable” contract in order to file a claim, whether oral or written. Therefore, the safest practice is to always get the agreement in writing.

Learn more: Can a Contractor File a Mechanics Lien Without a Written Contract?

How does Louisiana treat pay-if-paid and pay-when-paid clauses?

Both pay-if-paid and pay-when-paid clauses are enforceable in Louisiana.

Pay-if-paid clauses

A pay-if-paid clause is enforceable in Louisiana and treated as a “suspensive condition” to payment if the clause contains clear and unequivocal language. An LA Court of Appeals opinion went so far as to state that the magic language for creating an enforceable condition precedent is usually words like “on condition that,” “if,” “provided that,” or by “some other phrase that conditions performance.”

Pay-when-paid clauses

A pay-when-paid clauses in Lousiana is also enforceable, but is not a “suspensive condition,” but rather it is treated as merely a timing mechanism. The clause will suspend the contractor’s obligation to make payment for a reasonable amount of time to recieve payment from the owner.

Are no-damages-for-delays clauses enforceable in Louisiana?

The enforceability of no-damages-for-delay clauses in Louisiana varies depending on whether the project is public or private.

Private projects

On private projects, such clauses are generally enforceable, with some limitations. Notably, delays of the kind that were not anticipated by the parties, or caused by bad faith or active interference.

Public projects

As far as public projects are concerned, the use of no-damages-for-delay clauses is strictly prohibited under La. R.S. 38:2216(H):

Any provision contained in a public contract which purports to waive, release, or extinguish the rights of a contractor to recover cost of damages, or obtain equitable adjustment, for delays in performing such contract, if such delay is caused in whole, or in part, by acts or omissions within the control of the contracting public entity or persons acting on behalf thereof, is against public policy and is void or unenforceable.

Can you contract around Louisiana’s prompt payment terms?

Private projects

Louisiana’s prompt payment laws apply to all private construction projects, with the exception of home improvement projects. The timing of payments to the prime contractor is not regulated, so this will be determined by the terms of the contract.

All other payments to subcontractors and suppliers must be made within 14 days of receipt of payment by the hiring party; which cannot be modified by the terms of the subcontract.

Public projects

On all public works projects in Louisiana, the prompt payment provisions regulated the timing of payments to both the prime contractor and all other parties.

The public entity must pay the prime contractor within 45 days of receipt of a pay app or final acceptance; depending on the type of payment. All other payments down the contracting chain must be made within 14 days of receipt of payment by the hiring party.

It doesn’t appear that any of these payment deadlines may be modified by contract. Particularly payment to the prime contractor, as the statute specifically states “the provisions of this Section shall not be subject to waiver by contract.

Can you contract around Louisiana's retainage requirements?

Private projects

The retainage laws in Louisiana do not govern the amount that can be withheld on private construction projects. The terms of the contract will govern the amount withheld and the timing of its release.

Public projects

The amount of retainage that can be withheld on public projects depends on the total contract price. If the project is less than $500K, no more than 10% may be withheld. For projects costing more than $500K, no more than 5% may be withheld as retainage.

The amount of retainage cannot exceed these limits and must be released by the public entity within 45 days of completion and acceptance of the project.

Does Louisiana have any specific requirements for construction contracts?

Yes, if the contractor is required to be licensed or registered with the Louisiana State Licensing Board for Contractors, then the contract must include the contractor’s name, contracting license number, classification, and certificates of insurance evidencing the amount of liability insurance and proof of workers’ compensation coverage under La. R.S. 37:2171.3.

Furthermore, if the agreement is for a home improvement project between $1K and $75K, the contract (in addition to the aforementioned requirements) must be in writing and contain:

• The complete agreement with a clear description of any other documents incorporated into the agreement;

• A detailed description of the work to be done and the materials to be used;

• The total amount agreed to be paid for the work (if a cost-plus or time & materials contract, an approximation of the expected costs);

• Signatures of all parties; &

• If repairing or replacing a roof through proceeds from an insurance policy, a right to cancel within 72 hours provision in 10pt, boldface type, along with a Notice of Cancellation for the owner’s use.

How long do I have to bring a breach of contract claim for nonpayment in Louisiana?

The statute of limitations (deadline) to file a breach of contract claim for nonpayment in Louisiana is the same whether the contract is oral or written. Claims must be filed within 10 years from the date of the breach under La. C.C. §3499.

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