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Getting Paid — Forms and the Law Of Invoicing
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Introduction
These forms consist of the various invoices or billing used for fixed price contract, cost-plus, as well as T and M contracts. These invoices have two major purposes: 1) obviously, a form to be used for billing, but equally important, 2) having the necessary provisions to make it easier for you to get paid and to minimize disputes. To accomplish this goal, it has just enough information to make it clear what you have done and how much is being requested. This is to eliminate surprises later on that the owner or general contractor was allegedly confused, surprised, did not receive enough information, or any other defense they might conjure up.
The idea is to give sufficient information, but not overdo it and make the form too complicated. For example, there is an accounting summary of the contract billing with change orders, so no one can claim surprise as to the amount requested — it is reiterated over and over in the progress and final billing statements. A judge or arbitrator is much less likely to "buy into" the defense of surprise or lack of agreement if someone has received detailed information over the course of the project and remained silent.
These invoices and related forms have been prepared by an experienced construction attorney. Their idea is to insure, as much as possible, that the contractor will be paid on time, that as few disputes as practical will ensue, and most importantly, that they will be enforceable in court or arbitration. The bottom line: to help you get paid. To this end, they have the following features:
List of Forms
Progress Invoice — Fixed Price Installment Contract (general). Invoice for a progress draw on a fixed-price or stipulated sum contract, used by a general contractor.
Progress Invoice — Fixed Price Installment Contract (sub). Invoice for a progress draw on a fixed-price or stipulated sum contract, used by a sub-contractor.
Final Invoice — Fixed Price Installment Contract (general). Invoice for the final billing on a fixed-price or stipulated sum contract, used by a general contractor.
Final Invoice — Fixed Price Installment Contract (sub). Invoice for the final billing on a fixed-price or stipulated sum contract, used by a subcontractor.
Invoice for Retention (general). At the end of a project, you first receive your final payment and when the project is complete and "closed out", you request the retention through this billing. Used by a general contractor.
Invoice for Retention (sub). At the end of a project, you first receive your final payment and when the project is complete and "closed out", you request the retention through this billing. Used by a subcontractor.
Retention Agreement. In most construction projects there is a catch 22: you have to waive all your lien rights (either by letting the time to file a lien expire or signing a final lien waiver) and only then, several days or weeks later, request your retention. Some but not all states to have a special provision that signing a final waiver is not a release of your retention, but you cannot really be certain. The law in most states provides that third parties, including the owner, can rely upon the statement in the final waiver that you have been fully paid and will never be able to assert lien rights. This Agreement solves such a dilemma and is beneficial to both the owner, general contractor, and subcontractor. It provides that there is a full lien waiver, but at the same time, after the project is completed and closed out, the contractor will still be owed the retention and be paid this amount.
Progress Invoice — Cost-Plus Installment Contract (general). Invoice for a progress draw on a cost-plus contract, used by a general contractor.
Progress Invoice — Cost-Plus Installment Contract (sub). Invoice for a progress draw on a cost-plus contract, used by a subcontractor.
Final Invoice — Cost-Plus Installment Contract (general). Invoice for the final billing on a cost-plus contract, used by a general contractor.
Final Invoice — Cost-Plus Installment Contract (general). Invoice for the final billing on a cost-plus contract, used by a subcontractor.
Installment Invoice — T and M Contract. Invoice for a progress draw on a T and M contract, used by a generals and subcontractors.
Final Invoice — T and M Contract. Invoice for the final billing on a T and M contract, used by a generals and subcontractors.
Simple Invoice (I-14a). A shorter version of invoice to be used on smaller jobs.
Simple Invoice (I-14b). The simplest invoice of them all.
Response to Billing Request. Used when you have received an invoice and are making the decision as to whether it is to be paid. This gives you the ability to unconditionally approve it, approve it with conditions (including furnishing of additional documentation), or simply rejecting it. It has space to give the reasons for any full or partial rejection. Used by generals and subcontractors.
Notice of Reservation of Rights and Check Protest. Used when you receive a check but it is not for the full amount billed. This gives you the ability to cash the check but at the same time reserve your legal rights to claim additional compensation.
Affidavit for Payment (payment request). For jobs that require a formal payment request. For example, this might be submitted to the owner, architect, construction manager, or project superintendent. Thus, some projects will issue a payment only if you certify: 1) subcontractors and suppliers will be paid with the monies received, 2) the work to date is done according to the plans, specifications, and code, and 3) materials have been delivered or incorporated into the improvement. Used for medium to large projects.
Certificate for Payment (payment approval). Used to approve a payment request. Certifies that the work has been performed under the contract documents, is the correct percentage complete, and all documentation is in order. Detailed sections to insert information on site observations, percentage complete or milestones completed, review of documents, retention, and remarks. Used for medium to large projects.
Certificate of Substantial Completion. Certifies that the project is complete under the contract documents and includes the approval of final payments to contractors.
First Demand Letter (demand for payment). Sample language for a demand letter when payment has not been made. A non-threatening request that is more in the form of a reminder. Is also a reminder that a finance charge of 2% per month, five days after the due date, will be assessed.
Second Demand Letter (demand for payment). The next level of demand with the warning of a temporary work stoppage if payment is not made.
Third Demand Letter (demand for payment). A final warning that if payment is not forthcoming, further work on the project will cease.
Fourth Demand Letter (demand for payment). The last demand letter. Further work will now stop and preparations will be made for filing the lien and subsequent lawsuit to foreclose.
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