Code of Alabama

Ala. Code § 41-16-3 (2026)

Timely Execution of State Contracts Required.

✓ official Alabama Legislature (ALISON) text, current July 2026

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(a) Whenever the State of Alabama is a party to any contract, the contract shall be executed by all parties in a timely fashion. When a party to a contract, other than the state, has fully executed the responsibility under the contract and there remains only the payment of funds by the state, payment shall be made in a timely manner. If the amount due by the state is not in dispute, payment shall be made within 30 days after the other party has completed his or her portion of the contract and presented a proper invoice. If the amount payable is not paid within 30 days, interest on the amount shall be charged. A party who receives a payment from the state in connection with a contract shall pay each of its subcontractors or sub-subcontractors the portion of the state’s payment to the extent of that subcontractor’s or sub-subcontractor’s interest in the state’s payment in accordance with the payment terms agreed to by the contractor and the subcontractor, but if payment terms are not agreed to, then within seven days after receipt of payment from the state. The payment shall include interest, if any, that is attributable to work performed by the subcontractor or sub-subcontractor. The interest rate shall be the legal amount currently charged by the state. Interest shall be paid from the same fund or source from which the contract principal is paid. Nothing in this subsection shall prevent the state, contractor, or subcontractor from withholding payments if there is a bona fide dispute over one or more of the following:

(1) Unsatisfactory job progress.

(2) Defective construction not remedied.

(3) Disputed work.

(4) Third party claims filed or reasonable evidence that a claim will be filed.

(5) Failure of the contractor, subcontractor, or sub-subcontractor to make timely payments for labor, equipment and materials.

(6) Property damage to owner, contractor, or subcontractor.

(7) Reasonable evidence that the contract, subcontract, or sub-subcontract cannot be completed for the unpaid balance of the contract or contract sum.

(b) In the event that there is a bona fide dispute over all or any portion of the amount due on a progress payment from the owner, contractor, or subcontractor then the owner, contractor, or subcontractor may withhold payment in an amount not to exceed two times the disputed amount.

(c) An owner is required to notify a contractor in writing within 15 days of receipt of any disputed request for payment. A contractor, subcontractor, and sub-subcontractor is required to provide written notification within five days of disputed request for payment or notice of disputed request for payment.

(d) The amount of retainage withheld by the contractor to the subcontractor or the subcontractor to the sub-subcontractor shall not exceed the retainage withheld by the state unless interest is applied to the withheld amount.

(Acts 1984, No. 84-407, p. 954; Acts 1996, No. 96-587, p. 927, §1.)

Notes of Decisions

Cited in 7 cases, 1995–2007 · leading case: Harbert Int'l, Inc. v. James, 157 F.3d 1271 (11th Cir. 1998).

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Harbert Int'l, Inc. v. James, 157 F.3d 1271 (11th Cir. 1998). · cites it 2× “Specifically, the court found that Alabama Code § 41-16-3, 1 which *1276 mandates timely payment to a contractor who has executed his duties under a contract with the state, and Standard Specification 109.”

Ex Parte Alabama Dept. of Transp., 978 So. 2d 17 (Ala. 2007). · cites it 2× “For the first time in this Court, Good Hope argues that in its complaint it was seeking a declaratory judgment construing § 41-16-3(a), Ala.Code 1975, which reads, in pertinent part, as follows: "Whenever the State of Alabama is a party to any contract, the contract shall be…”

Spring Hill Lighting & Supply Co. v. Square D Co., Inc., 662 So. 2d 1141 (Ala. 1995). “See § 39-5-4; § 41-16-3; and § 41-16-61. In this case, Spring Hill does not seek to enjoin the letting or execution of the contract or the payment of public funds under the contract.”

Good Hope Contracting Co. v. Alabama Dep't of Transp., 978 So. 2d 17 (Ala. 2007). · cites it 2× “For the first time in this Court, Good Hope argues that in its complaint it was seeking a declaratory judgment construing § 41-16-3(a), Ala.Code 1975, which reads, in pertinent part, as follows: “Whenever the State of Alabama is a party to any contract, the contract shall be…”

Harbert Int'l v. James, 157 F.3d 1271 (11th Cir. 1998). · cites it 2× “Specifically, the court found that Alabama Code § 41-16-3,1 which mandates timely payment to a contractor who has executed his duties under a contract with the state, and 1 Alabama Code § 41-16-3 provides in relevant part: “Whenever the state of Alabama is a party to any…”

R.E. Grills Constr. Co. v. Alabama Dep't of Transp., 198 F. Supp. 2d 1297 (N.D. Ala. 2002). “Code §§ 41-16-3, et seq.” Id. ¶¶ 17-19. Count Three — Violation of 42 U.”

APAC-Mississippi, Inc. v. James Constr. Grp., L.L.C., 370 F. Supp. 2d 528 (S.D. Miss. 2005). “Ala.Code § 41-16-3 (2001)(emphasis added).”

— Ala. Code § 41-16-3(a) — 2 cases

Ex Parte Alabama Dept. of Transp., 978 So. 2d 17 (Ala. 2007). “For the first time in this Court, Good Hope argues that in its complaint it was seeking a declaratory judgment construing § 41-16-3(a), Ala.Code 1975, which reads, in pertinent part, as follows: "Whenever the State of Alabama is a party to any contract, the contract shall be…”

Good Hope Contracting Co. v. Alabama Dep't of Transp., 978 So. 2d 17 (Ala. 2007). “For the first time in this Court, Good Hope argues that in its complaint it was seeking a declaratory judgment construing § 41-16-3(a), Ala.Code 1975, which reads, in pertinent part, as follows: “Whenever the State of Alabama is a party to any contract, the contract shall be…”

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