As part of our commitment to keeping you informed, we want to highlight some significant changes to Louisiana State Construction Law that could impact your ongoing and future construction projects. Recently, Governor Jeff Landry signed two pivotal laws‐La. Acts Nos. 758 and 761‐that alter payment protocols and broaden defenses for sureties.

1. Surety Defenses

The new laws empower sureties with defenses against nonpayment claims, a privilege that was previously limited to general contractors. If your contract includes a "pay‐if‐paid" or "pay‐when‐paid" clause, sureties now have the authority to refuse payment on nonpayment bonds to subcontractors based on these clauses.

2. Material Suppliers' Notice Requirements

Material suppliers must now adhere to a new timeline: they are required to wait 45 days from the delivery of materials to send a notice of nonpayment to the general contractor, surety, and owner. If payment is not received within 90 days, suppliers can issue a formal notice demanding payment within 10 days.

These changes are particularly crucial for anyone involved in public construction projects in Louisiana. The implementation of "pay‐if‐paid" and "pay‐when‐paid" clauses means that nonpayment risk can be shifted to lower-tier subcontractors. Consequently, even if a surety acknowledges that payment is owed, they may not be obligated to fulfill that payment if these clauses are present in your contracts.

To effectively navigate these new regulations, it's essential to review both existing and future contracts meticulously. Pay special attention to any language suggesting a "pay‐if‐paid" clause, such as "condition precedent" or "if and only if." Proactively negotiating contract terms can significantly reduce potential payment disputes.

We encourage you to discuss these legislative updates with your team and formulate strategies that align with the new protocols. Being informed and proactive is key to ensuring smoother operations and minimizing risks related to payment disputes.

If you have any questions or need further clarification on how these changes might affect your projects, please don't hesitate to reach out. We're here to help you navigate these important updates.