Legal Question in Construction Law in Pennsylvania

Retainage Laws for suppliers

We are an Architectural Millwork company. We supply woodworking and cabinetry to commercial construction jobs in New Jersey and Pennsylvania. We do no site work just supply only. We have gone round and round with retainage on many jobs. We have gotten advise from many people but no distinct and fact driven answers. What we what to know is retainage allowed to be held on suppliers. We consider ourselves suppliers as opposed to subcontractors. If we new the law and had some proof of it it would certainly help our negotiating stand point.Thank you in advance for any information provided.

Asked on 10/28/04, 7:14 am

1 Answer from Attorneys

Alan Albin Alan S. Albin, Attorney at Law

Re: Retainage Laws for suppliers

It sounds like it is time for your company to retain an attorney to assist you with development of contract formats and contract negotiations that you may have in the future.

(Please contact me if you wish to discuss retaining my services, see below.)

The parties to a commercial contract are generally free to voluntarily negotiate, at arm's length, legally enforceable contracts which contain any terms acceptable to both parties.

The distinction you make between "supplier" and "subcontractor" is a false one, as you may certainly fill both roles simultaneously.

In any case, by "retainage" I assume what you mean is that you are not receiving 100% payment up front, as a deposit; or alternatively, that the companies you vend to will not pay upon satisfactory delivery, but rather await to be paid by the ultimate client before paying you what is owed.

Any such terms are purely a matter for negotiation between your company and other companies. If you can successfully negotiate 100% payment in advance, you are permitted to do so. (Obviously if you don't perform, you may have legal liability under the contract.) On the other hand, no-one is obligated to do business with you on any particular terms.

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Answered on 10/28/04, 10:44 am

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