Behind in billing, invoice overlooked. Are they bound by Texas Prompt Pay regardless?
1 reply
Jan 16, 2020
Looking to the text of the Texas prompt payment statute (specifically, at § 28.002), whether or not prompt payment penalties will come into play may depend on your role in the project.
For contractors hired by the owner, it appears a written payment request must be made before prompt payment laws come into consideration. However, for those being paid by the contractor or a subcontractor, the statute doesn't appear to specifically require a request for payment in order for the state's prompt payment laws to kick in. Though, it's common in other states for that to be a prerequisite to interest accruing.
So, at least based on a strict reading of the state's prompt payment laws, it appears that prompt payment interest may begin accruing even if the party who's unpaid failed to actually invoice the given payment. Note, though, that it would hardly be surprising if a court refused to award prompt payment interest penalties to a party who's gone unpaid due to a failure to send proper invoices. So, if push came to shove and the matter landed in front of a judge, it's conceivable that prompt payment penalties might not be avoided. Regardless, an unpaid party may be able to leverage prompt payment arguments while trying to force a customer to pay an old invoice - even if the claim might land in somewhat of a grey area.
For more on Texas prompt payment: Texas Prompt Payment Guide & FAQs.