National Association of Credit Management

Bond rights may not be waived prior to performance of one's work.
Federal District Court Rules Pay-When-Paid Provision Does Not Waive Federal Miller Act Rights. The U.S. District Court for the Northern District of Georgia, Atlanta Division, ruled Jan. 29, 2008 that pay-when-paid provisions do not waive a subcontractor's right of recovery under the Miller Act. Prime contractors are prohibited from requiring subcontractors to waive their payment bond rights prior to commencement of work. The district court ruled the Miller Act's bar of contractual waivers of the right to recover under the bond: "The pay-when-paid provision of the contract did not bar the subcontractor's recovery against the surety, even through the prime contractor had not yet been paid."
The Prompt Pay Act [31 U.S.C. § 3901 et seq.] does not require payment to a sub until seven days after a prime receives payment from the agency.
A waiver of the right to sue on a payment bond is void unless it is:
- In writing.
- Signed by the person whose rights are waived.
- Executed after that person has furnished labor or materials for use on the prime contract.