(a) The owner shall pay the contractor strictly in accordance with the terms of the contract.
Terms Used In Delaware Code Title 6 Sec. 3507
- Contract: A legal written agreement that becomes binding when signed.
- Litigation: A case, controversy, or lawsuit. Participants (plaintiffs and defendants) in lawsuits are called litigants.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- real property: is synonymous with the phrase "lands, tenements and hereditaments. See Delaware Code Title 6 Sec. 4307
- State: means the State of Delaware; and when applied to different parts of the United States, it includes the District of Columbia and the several territories and possessions of the United States. See Delaware Code Title 6 Sec. 4307
(b) If the terms of the contract do not contain a term governing payment, the contractor shall be entitled to submit an invoice to the owner for payments at the end of the billing period for:
(1) Work already commenced but not fully completed and/or,
(2) Materials already supplied,
if the agreed upon work is completed at the end of such billing period.
(c) If the contract between the owner and a contractor, or between contractors, does not contain a provision governing when invoices may be submitted, a contractor shall be entitled to submit a final invoice for payment in full when the agreed-upon work is fully completed. The owner shall pay all undisputed amounts owed to the contractor within 30 days after the end of the billing period or 30 days after delivery of the invoice, whichever is later. This subsection shall not be construed to impair the right of an owner to include in a contract provisions that permit the owner to retain a specified percentage of each progress payment otherwise due to a contractor and each supplier for satisfactory performance under the contract.
(d) If subcontractor payment terms are not specified in the contract between the owner and a general or prime contractor, or in the contract between the general or prime contractor and a subcontractor, or in the contract between the subcontractors, a general contractor, prime contractor or subcontractor shall pay all undisputed amounts owed to its subcontractors, suppliers and/or materialmen within 15 days after receipt by the general contractor, prime contractor or subcontractor of each payment received for work performed or materials supplied by its subcontractors, suppliers and/or materialmen. This subsection shall not be construed to impair the right of an owner or contractor to include in a subcontract provisions that permit the owner or contractor to retain a specified percentage of each progress payment otherwise due to a subcontractor and each supplier for satisfactory performance under the subcontract.
(e) It shall be against public policy and shall be void and unenforceable for any provision of a construction contract or subcontract agreement to:
(1) State that a contractor assumes the risk of nonpayment of the owner;
(2) Require a contractor to waive any statutory or other right to commence litigation or arbitration until payment is made to the general or prime contractor;
(3) Make subject to payment by the owner the obligation of a contractor and its surety under any payment or performance bond to make any payment to a claimant under such bond;
(4) State that a contractor relies on the credit of the owner and not on the credit of the general or prime contractor or of a bonding company; or
(5) Require a dispute or claim between the contractor and subcontractor to be governed or subject to the laws of a state other than Delaware or require litigation, arbitration, mediation or other dispute resolution processes to occur in a state other than Delaware.
(f) This section shall not apply to:
(1) Public works contracts awarded under Chapter 69 of Title 29;
(2) Contracts for the erection of 6 or fewer residential units which are under construction simultaneously, or for the alteration or repair of any single residential unit; or
(3) Contracts for the purchase of materials by a person performing work on that person’s own real property.