New York’s State Legislature has just passed a bill that would require a no-prejudice standard be applied in determining the application of notice provisions in public construction contracts. [1]
The bill amended current statutes [2] so as to require that unless the public owner can show they have suffered material prejudice as a result of a contractor’s (or/and subcontractor’s) failure to provide timely notice, rights are not barred. If the required notice is received more than 180 days after the time required under the contract, the burden to establish no-prejudice shifts to the contractor/subcontractor.
The Legislature Memo prepared to explain and support the bill referred to current notice provisions as one-sided and unfair “gotcha” provisions. The Memo further contended that some public owners were getting “free work” when contractors or subcontractors are barred from pursuing claims due to non-compliant notices.
Another significant element of the bill appears in the definitional section where it is provided that a “public owner’s actual knowledge of the events in question shall preclude a claim of material prejudice due to any lack of notice.” Some city and state contracts often specifically provide that actual knowledge cannot relieve contractors of the strict requirements of the notice provisions.
The bill will not become effective, however, until 180 days after it is signed by the Governor and becomes law and then only as to contracts awarded after that date.
The text of the bill is here .
1. The bill is A10136 and S6906 which passed on June 18, 2016.
2. The bill amends the Public Authorities Law, the General Municipal Law, the Public Service Law and the State Finance Law.
