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Delaware Waivers

Delaware Waivers

  • Any contract, any agreement or understanding whereby the right to file or enforce any lien created under Delaware lien law is waived shall be void as against public policy and wholly unenforceable.  25 Del. C. §2706(b).
  • Waivers of lien rights as consideration for receiving a contract are void as against public policy.
  • There is no implied waiver of lien rights resulting from a pay-if-paid clause.
  • Lien waivers given in exchange for partial or final payments are not affected.
  • No cases have yet to interpret the bounds of the statutory prohibition of "pay-if-paid" clauses. The statute was passed in 2002.
  • “Pay when Paid” suggests time for payment.
  • Pay-when-paid clause in the subcontract or purchase order do no not create a condition precedent to payment.

Retainage Provisions

Public

  • DEL. CODE ANN. tit. 29, § 6962(5)(a)(1).  Agencies may retain a portion of the payments to be made to a contractor for work performed pursuant to a public works contract.  Retainage shall not exceed 5 percent of the value of the work completed by the contractor. Upon completion, the public entity may release 60 percent of the retainage amount.  The balance is released when the contractor submits all required reports, all subcontractors are paid by the contractor, and the agency authorizes release. The contractor under a public works contract, with the approval of the agency, may deposit securities as authorized by this section in substitution for monies being withheld from the contractor as retainage. Securities allowable for substitution of retainage shall be: United States Treasury Bonds, United States Treasury Notes, United States Treasury Certificates of Indebtedness or United States Treasury Bills; bonds or notes of the State; bonds of any political subdivision of the State; or certificates of deposit from state or national banks located in this State; or any letter of credit or other security approved by the agency.  DEL. CODE ANN. tit. 29, § 6962(5)(c).  In the event of a dispute between a contractor and subcontractor over the amount owed, the agency may withhold 150 percent of the amount withheld by the contractor in the contractor's dispute with the subcontractor. DEL. CODE ANN. tit. 29, § 6962(5)(a)(1)(B).