Perspectives

Louisiana has enacted significant amendments to its bond claim statutes, impacting both private and public projects. These changes, which took affect on August, 1, 2024, for private bond claims and June 19, 2024, for public bond claims, introduce new obligations for sureties while also allowing them to assert additional defenses in certain circumstances.

Key Changes in the Law

One of the most notable updates is the introduction of “pay-if-paid” and “pay-when-paid” defenses for sureties, provided these provisions exist in the general contractor’s contract. However, material suppliers are specificaly exempt from these defenses, ensuring stronger payment protections for their claims.

How Material Suppliers Can Secure Payment

Under the amended statuses, sureties are now required to make payment to a material supplier if the following conditions are met:

1. Delivery Compliance: The materials supplied must conform to the specifications outlined in the order.
2. None of Nonpayment: If 45 days pass without payment after material delivery, the supplier may send a Notice of Nonpayment to the general contractor, surety, owner.
3. Final Payment Notice: If 90 days elaps from the date of delivery without receiving payment, the supplier can issue a “payment notice” to the surety.
4. Mandatory Payment Decline: Upon receipt of the “payment notice”, the surety must pay the material supplier within 10 days. While the statute is unclear, it appears the deadline for payment is based on the date the “payment notice” is mailed rather than when it is received.

Proper Notice Delivery is Critical 

To ensure compliance with the new requirements, all required notices should be sent via registered or certified mail, return receipt requested. This helps establish a clear record of compliance with statutory deadlines and protects the material supplier’s rights.

While the law does not provide a detailed definition of a “payment notice”, it is reasonable to assume that this notice should include:

• Acopy of the outstanding invoice(s)
• A copy of the previously sent Notice of Nonpayment

What this Means for Material Suppliers

These amendments provide a structured process for material suppliers to secure payment more effectively, reducing the risks associated with delayed or withheld funds. By following the outlined notice procedures, material suppliers can ensure their claims are properly documented and enforceable under the new legal framework.

For businesses supplying materials on bonded projects in Louisiana, understanding and adhering to these new requirements is essential to securing timely payments and avoiding potential disputes. Staying informed and proactive in sending notices can make all the difference in ensuring financial stability and compliance with the updated bond laws.

Partner with WFJ for Legal Guidance and Protection

Navigating legal changes can be complex, but you don’t have to do it alone WFJ is here to help businesses stay compliant, protect their projects, and secure payments efficiently. Our legal team is well versed in construction law and bond claims, ensuring your rights are safeguarded under the latest legal updates. Contact WFJ today to learn how we can support your business and keep your projects moving forward without unnecessary financial risks.

Navigating the ever-evolving landscape of lien and bond laws is crucial for construction professionals and large businesses looking to protect their financial interests. In recent years, several states have enacted key legislative changes impacting private, commercial (non-residential) mechanic’s lien claims and public bond claims-shaping how contractors, suppliers, and other stakeholders secure payment on projects. Staying informed about these updates can mean the difference between a smooth claim process and costly legal disputes. Below, we break down some of the significant changes affecting commercial and government construction projects.

 Public Bond Threshold

In recent years, more states have raised the minimum contract amount that requires general contrators on public projects to secure a payment bond. Here are some of the latest increases:

Alabama – $50,000 – $100,000

Kentucky – $40,000 – $100,000

Illinois – $50,000 – $150,000

Montana – $50,000 – $150,000

Subcontractors and material suppliers should continue to track these increases to ensure there is payment protection on these government projects.

Florida

In October 2023, the Florida lien law was amended.  Notably, Florida expanded the definition of “contractor” to include both construction management services and program management services.  Construction management services include coordinating and scheduling a project’s preconstruction and construction phases, and program management services include cost and schedule control, and coordinating project planning, design, and construction.

Additionally, if a payment bond has been posted on a private project, both the contractor and the contractor’s surety must be served with the Notice of Nonpayment.  For rental equipment, the Notice must be served no later than 90 days after the date that the equipment was on the project and available for use.

Louisiana

In 2024, the law was amended for payment bonds on both private and public projects.  On payment bond claims, sureties may now assert contingent payment clauses as a defense to payment.  If there is a “pay-if-paid” or “pay-when-paid” clause in the contract, a surety can now rely on those clauses to avoid payment.

However, the amended law also created an exception for material suppliers.  If the material supplier sends notice of non-payment to the general contractor, surety, and owner, at least 45 days after the date of delivery, and is not paid within 90 days of the delivery of the materials, the surety is obligated to make payment on the supplier’s claim no later than 10 days after the supplier sends a payment notice.

Texas

In 2023 Texas amended the law for change orders issued on an current project.  For all construction contracts entered on or after September 1, 2023, if the contractor (or subcontractor) receives a directive and the value of that change totals 10 percent or more of the original contract value, the contractor (or subcontractor) can decline the work.   The contractor or subcontractor now has a statutory right to refuse to proceed with the work before an executed change order is signed.  Additionally, a contractor or subcontractor who elects not to proceed with additional work is not responsible for damages associated with the election not to proceed.

Virginia

Effective January 1, 2023, Virginia eliminated pay-if-paid provisions in construction contracts.  If the prime contract was executed prior to January 1, 2023, pay if paid clauses are enforceable, assuming the applicable contract language is clear and unambiguous.   However, if the prime contract was executed on or after January 1, 2023, a pay-if-paid clause is not enforceable in Virginia.

Changes in line and bond laws can create unexpected challenges, but they also present opportunities to strengthen your payment security. WFJ provides the legal knowledge and strategic support you need to adapt to new requirements and protect your projects. Let’s work toegether to ensure your contracts, claims, and compliance efforts are rock solid.

The information provided in this summary does not, nor is it intended to, constitute legal advice. You should not take or refrain from taking any action based on any information contained in this summary without first seeking legal advice.

State specific opinion letters are available upon request.

When a customer files for Chapter 7 bankruptcy, it’s crucial to act swiftly and strategically to protect your company’s financial interests. Below is a practical to-do list for credit managers and finance professionals navigating this complex process.

• Confirm the filing

Verify the bankruptcy filing by obtaining the case number and confirming the court’s jurisdiction.

• Comply with the Automatic Stay

Cease all collection activities immediately to avoid potential penalties for violating the automatic stay.

• Obtain the Petition and Mailing Matrix

Review the bankruptcy petition and mailing matrix to ensure your debt is listed correctly Confirm your company’s mailing address to receive important notices.

• File a Proof of Claim

Submit a timely proof of claim to establish your right to receive any distributions from the debtor’s estate.

• Review Recent Transactions

Examine transactions within the last 90 days for potential preferential payments that may be subject to crawlback.

• Evaluate Fraud Concerns

If you suspect fraud, consider pursuing and adversary proceeding to challenge the discharge of the debt.

• Confirm Lien and Bond Rights

Ensure your lien or bond rights are presereved. These rights may offer additionaly protections, even during bankruptcy.

Take Action Today

Navigating a customer’s bankruptcy requires attention to detail and expert legal guidance. Wagner, Falconer & Judd specializes in protecting creidtor’s rights. Contact us to ensure your business is positioned for the best possible outcome in Chapter 7 cases.

If one of your goals in 2025 is ensure your contracts are more secure, you’re not alone. Contracts are often viewed as administrative necessities, but for businesses involved in capital equipment sales-whether it’s large machinery, medical devices or construction materials-contracts are powerful tools for mitigating financial and legal risks. Poorly drafted agreements can lead to costly disputes, lost revenue, and exposure to liabilities that could threaten the financial stability of your business. By incorporating key provisions, you can safeguard your operations and reduce potential risks. Let’s explore three critical contract terms every capital equipment provider should prioritize.

Limitation of Liability: Safeguard Your Financial Interests

A limitation of liability clause protects your business from excessive financial exposure by capping the damages you may be required to pay in the event of a dispute or breach. For capital equipment providers, this protection is crucial given the significant cost associated with product failures, delayed delivery, or operational downtime.

How it works:

This clause limits liability to a specific dollar amount, such as the contract value or a predetermined ceiling, ensuring your exposure is manageable. For example, if a client incurs significant losses due to malfunction, your liability could be limited to the purchase price of the product rather than broader, unpredictable costs like lost profits or third-party claims.

Best Practice:

Be precise in defining the cap and consider excluding specific types of damages, such as consequential, incidental, or punitive damages. Keep in mind that enforceability may vary by  jurisdiction, so consult legal counsel to endure your contracts are legally sound and enforceable.

Warranties: Clearly Define Your Obligations

Warranties establish the scope of your obligations and help set customer expectations, which is critical in capital equipment sales where trust is essential. Warranties can be express (explicitly stated) or implied (automatically applied by law). Managing these warranties properly can prevent misunderstandings and legal disputes.

Express Warranties:

These are explicit promises regarding the product’s performance, quality, or lifespan. They’re often detailed in contracts, marketing materials, or technical specifications. Missteps in how these promises are worded can lead to overcommitments and liability exposure.

Implied Warranties: These include written guarantees like the warranty of merchantability (the product will perform as expected) and fitness for particular purposes (the product is suitable for the buyer’s specific need). While these are automatic in many transactions, they can often be limited or disclaimed through carefully crafted contract language.

Best Practice:

Specify what is covered and for how long. If applicable, disclaim implied warranties to avoid unforeseen obligations. For example, a clause such as “The product is sold as-is with no implied warranties” can significantly reduce your risk.

Indemnity Clauses: Shift Liability for Third-Party Claims

Indemnity clauses allocate the financial responsibility for third-party claims to a specific party, which is essential in capital sales where the risk of product-related claims is higher. These provisions protect your business from bearing the financial burden of lawsuits related to product performance, safety, or improper use by the customer.

How it works:

If a customer or a third party files a claim due to a malfunction, defect, or accident, an indemnity clause can transfer the responsibility for legal costs, settlements, and damages away from your company. This is particularly valuable in industries like construction, healthcare, and heavy equipment, where operational risks are significant.

Best Practice:

Ensure the indemnity clause defines the scope of claims covered and the extent of liability. In some cases, mutual indemnity-where both parties agree to indemnify each other under certain circumstances-can provide balanced protection.

The Bottom Line: Protect Your Business Through Smart Contracting

For capital equipment providers, contracts are more than legal agreements-they are essential risk management tools. By integrating provisions such as limitation of liability, clear warranties, and well-structured indemnity clauses, you can significantly reduce your exposure to financial loss and legal disputes.

Taking the time to review and refine your contracts with experienced legal counsel ensures that these provisions are both enforceable and tailored to your unique business needs. Protecting your business today with robust contract terms can prevent costly issues down the road and strengthen your financial stability. Take action. If you’re unsure whether your contracts effectively reduce your risk, now is the time for a review. Contact Wagner, Falconer and Judd for expert guidance on drafting capital sales contracts designed to protect your bottom line.

Ensuring timely and accurate lien filing is a critical part of securing payments and protecting company revenue. However, with the complexities of state-specific lien laws and strict filing deadlines, managing the lien process internally can be fraught with challenges that put even the most organized teams at risk. Outsourcing lien filing to professionals, particularly legal experts, can provide much-needed relief and strategic advantages.

Here’s when you should consider it-and why partnering with a law firm can safeguard your interests.

The Challenges of In-House Lien Management

Credit professionals face numerous obstacles in managing liens, including:

• Complex and Varied State Laws

Each state has unique lien laws governing what qualifies for a lien, notice requirements, filing deadlines, and the duration of the lien’s validity. Missing a step or misunderstanding a state-specific requirement can invalidate your lien, leaving your company unprotected.

• Strict Deadlines 

Many states have short and unforgiving deadlines for filing preliminary notices, liens, and other associated documents. Balancing these deadlines with other pressing financial duties increases the likelihood of errors.

• High Stakes

An improperly filed lien doesn’t just cost your company money; it can strain relationships with clients and business partners, damaging future opportunities.

• Resource Constraints

Even the largest companies are often stretched thin managing accounts receivable, disputes, and other tasks. Taking on lien filing adds an additional layer of responsibility that can overwhelm internal teams.

Key Benefits of Outsourcing Lien Filing to Legal Professionals

Bringing in a law firm with expertise in lien law can alleviate these pain points and position your company for success. 

• State-specific Expertise

Legal professionals stay up-to-date with state-specific lien requirements and legislative changes, ensuring that filings comply with all laws and regulations.

• Deadline Management

A dedicated legal team will ensure that notices and filings are submitted on time, mitigating the risk of losing lien rights due to missed deadlines.

• Accurate Documentation

Attorneys can handle the meticulous preparation of lien documents, reducing the likelihood of disputes over improper filings.

• Strategic Advisory

Beyond filing liens, legal counsel can advise on how to structure contracts to strengthen lien rights and improve your position in case of disputes or non-payment.

• Improved Efficiency

Outsourcing lien management allows your team to focus on core responsibilities without sacrificing lien protection or compliance.

When to Make the Switch

Consider outsource lien filing if:

• Your company operates in multiple states, each with different lien laws.
• Your team struggles to meet the deadlines associated with preliminary notices and lien filings.
• You’ve experienced errors or invalidation in past lien filings.
• You’re expanding into new markets with unfamiliar lien laws.
• Your team has a high workload, and lien filing is becoming a distraction from core financial tasks.

Why Partner with a Law Firm for Lien Filing?

While some companies may consider lien service providers, partnering with a law firm offers an unparalleled advantage: comprehensive legal protection. The attorneys at Wagner, Falconer & Judd don’t just file liens; they provides advice on how to prevent payment disputes and protect your company’s rights under the law.

At WFJ, we specialize in helping you secure your business through effective lien filing and legal counsel. Our team is experienced in state-specific lien laws and deadlines, ensuring your company is always protected.

Don’t let the complexity of lien filing jeopardize your revenue. Contact us today to learn how we can streamline your lien processes, so you can focus on growing your business with confidence.

Take Action

If you’re ready to reduce risk and maximize efficiency, we’re here to help. Reach out to WFJ to schedule a consultation and take the first step toward stronger lien protection.

Filing a lien is a powerful tool for securing payment, especially in industries with complex credit transactions like construction, manufacturing, and large equipment leasing. However, errors during the lien filing process can invalidate your claim and put your payment at risk. Avoid these common pitfalls with our checklist to keep your lien rights intact.

1. Understand Your State’s Deadlines: Lien laws vary by state, and missing deadlines can void your claim. Familiarize yourself with each state’s specific timeline for filing a Notice of Intent, the lien itself, and any additional notices.
2. Send Preliminary Notices: Many states require you to send preliminary notices before filing a lien. Ensure you send these on time, or your lien claim may be invalid. Even when not required, a preliminary notice can remind customers of payment obligations.
3. Files Against the Correct Party: Identify the property owner and parties in charge of payments. Filing against the wrong party can delay the process or invalidate your lien.
4. Double-Check Contract Details and Amounts: Include accurate information in your lien claim, including contract amounts, dates, and any unauthorized changes. Overstating or misstating your claim amount can raise legal issues, jeopardizing your lien.
5. Prepare Complete Documentation: Gather all supporting documentation, including contacts, change orders, and proof of delivered services or goods. Detailed records not only strengthen your lien but are crucial if your claim goes to court.
6. Avoid DIY Errors-Seek Legal Help for Complex Filings: Liens in specialized industries may require additional steps or filings. Partnering with legal professionals who understand industry specific nuances ensure compliance and strengthen your lien rights.

By following this checklist, credit, and finance professionals can mitigate risks and increase the likelihood of successful lien filings, ultimately protecting your company’s cash flow and ensuring timely payments.

Addressing defaults and outlining remedies within contracts is crucial for protecting businesses from financial risk. For finance teams, it is essential to ensure that these provisions are robust and clear, providing them with the necessary tools to respond effectively in the event of a customer’s default.

A default occurs when a party fails to fulfill its contractual obligations, such as making timely payments or or adhering to the terms of a lease or purchase agreement. To mitigate the financial impact of a default, contracts should include late or missed payments, failure to maintain insurance, or unauthorized use of equipment. By clearly defining what constitutes a default, the dealer can act swiftly and decisively when a breach occurs.

Once a default is established, the contract should provide a range of remedies to protect the businesses’ financial interests. Common remedies include the right to repossess any equipment, acceleration of payment obligations (where the full amount due becomes immediately payable), and the imposition of late fees or interest on overdue payments. The right to terminate the contract and recover damages, including the cost of retrieving and refurbishing the equipment, should also be clearly articulated.

To further strengthen these protections, finance teams should ensure that contracts include provisions for legal fees and costs, allowing the dealer to recover expenses incurred in enforcing the contract or pursuing legal action. Additionally, contracts should specify that any waiver of a default or delay in enforcement does not constitute a waiver of the dealer’s rights under the contract, preserving the dealer’s ability to enforce the agreement in the future.

It is also important to include dispute resolution mechanisms, such as arbitration or mediation, which can provide a more efficient and cost-effective means of resolving conflicts without resorting to lengthy litigation. These mechanisms should be clearly outlined in the contract, along with the steps required to initiate them.

Finally, finance teams should work closely with legal counsel to ensure that default and remedy provisions are tailored to the dealership’s specific needs and are compliant with applicable laws. Regular review of contract templates and updates in response to changes in the law or business practices is essential for maintaining effective protection.