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New Jersey Legislature Serves Up An Appetizer to Contractors



January 14, 2002

While leaving untouched the Municipal Materialman’s Lien Act, which is still in dire need of overhaul, the New Jersey Legislature has passed two bills that can assist the beleaguered contractor. 

The first law, codified at N.J.S.A. 40A:11-19 (Local Public Contracts Law), provides that a contract may include a provision for liquidated damages, and voids provisions that limit a contractor’s remedy for the contracting unit’s negligence delay. In essence, the Act limits a contracting unit’s ability to include a provision that calls for no damages for delay. A similar limitation has been written into N.J.S.A. 18A-1 et seq. (Public School Contracts Law). This makes the law consistent with N.J.S.A. 2A:58B-3, which prohibits such provisions in contracts with State agencies.

 The second law, codified at N.J.S.A. 59:13-8, allows for prejudgment interest on all or part of a judgment arising out of a construction improvement to real property. This overturns the prohibition on prejudgment interest in the Contractual Liability Act.

 The effect of these laws is to give the contractor broader remedies.