The Nebraska Statutory Interest Rate:

Failure to pay invoices promptly may result in liability for interest at a rate of twelve percent (12%) per year, as specified under Neb. Rev. Stat. § 45-104. This statute establishes that unless otherwise agreed upon, interest is set at twelve percent (12%) annually on money owed under any written contract or instrument from the date of billing unless paid within thirty days. Thus, even if there is no specific provision within the contract relating to interest, individuals or entities who do not meet their financial obligations on time may become liable for this statutory interest as a consequence, reinforcing the importance of timely payment to avoid additional financial liabilities.

Applicability of the Statutory Rate to Construction Contracts:

In the case of BCL Props. v. Boyle, the Nebraska Supreme Court held that a general contractor was entitled to prejudgment interest under § 45-104 in a dispute with a property owner over payments related to a residential construction project. The court held that because the construction contract constituted a written instrument involving money owed, prejudgment interest at twelve percent (12%) per annum applied, regardless of whether the amount owed was in dispute or not yet fixed.

Similarly, in Echo Grp., Inc. v. Tradesmen Int'l, the court recognized that § 45-104 also applies to debts secured by a construction lien stemming from an underlying contract. This interpretation affirms that the statutory interest rate to contractual debts covered by § 45-104, ensuring consistency in its application across various contractual disputes.

Flexibility to Negotiate Interest Rates:

It is important to note that the statutory interest rate serves as a default. However, varying interest rates may be contracted for if all parties agree, provided that the agreed-upon rate does not violate any applicable usury rate.

As a result, contractors should carefully examine their contracts, or seek legal counsel for contract review, to understand how contractual or prejudgment interest could impact the resolution of any payment disputes. If you have any questions about interest that may be owed under your construction contract, please do not hesitate to contact any member of Koley Jessen’s Construction Industry Practice Area.

_{This content is made available for educational purposes only and to give you general information and a general understanding of the law, not to provide specific legal advice. By using this content, you understand there is no attorney-client relationship between you and the publisher. The content should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.}