Miller Act

In 1935, Congress passed the Miller Act, eliminating the right of a subcontractor or supplier to impose any form of mechanics lien The right of one person to retain possession of the goods of another until the latter fulfills an obligation, such as the payment of a debt. or other encumbrance against federal public works projects. The primary purpose of the Miller Act, is to protect In a draft collection transaction, the formal legal process of registering that payment or acceptance of the draft has been demanded but the drawee has refused to pay or accept the draft. draft A negotiable instrument that calls for payment of money. The drawer (or seller) orders in writing for the drawee (or buyer) to pay a specific amount of money to the drawer on a certain date. Also called a bill of exchange. collection transaction, the formal legal process of registering that payment or acceptance When a drawee acknowledges in writing on the face of the draft that the buyer will pay the draft at maturity. (See also Draft, Drawee.) of the draft has been demanded but the drawee The person, company, or bank upon which a draft is drawn. has refused to pay or accept the draft. draf A negotiable Quality belonging to a document to transfer ownership of money, goods, or other items of value specified in the document by endorsement and/or delivery of the document. endorsemen Writing one's name upon paper for the purpose of transferring the title The exclusive rights, powers, privileges and immunities to property, real and personal, tangible and intangible. . t and/or delivery of the document. instrument A right to the payment of money such as agency notes, commercial pape The unsecured promissory notes of large, financially sound corporations. r, T-Bills, certificates of deposit (CD's), banker's acceptances and repurchase agreements. that calls for payment of money A medium of exchange; coined or stamped currency. . The drawer The person, company, or bank that creates the draft and receives payment. (or seller) orders in writing for the drawee (or buyer) to pay a specific amount of money to the drawer on a certain date. Also called a bill of exchange (See Draft.) . t collection transaction, the formal legal process of registering that payment or acceptanc When a drawee acknowledges in writing on the face of the draft that the buyer will pay the draft at maturity. (See also Draft, Drawee.) e of the draft has been demanded but the drawe The person, company, or bank upon which a draft is drawn. e has refused to pay or accept the draft. subcontractors who supply material and labor to federal public works projects. It does so by providing an alternate remedy Relates to the judicial means or court procedures by which legal and equitable rights are enforced. to the assertion of mechanics liens.

Under the Miller Act, the principal Party entrusting a draft and/or documents to a bank for collection of payment, generally the seller of goods. or general contractor must provide a standard payment bond A promise under seal to pay money; an IOU or promissory not A legal and binding promise by a debtor (the promisor) to pay a certain sum of money to a creditor (the promisee) at a future date, usually with interest at a fixed rate. e issued as evidenc Testimony of witnesses and facts presented to the court and jury by way of writings and exhibits, which impress the minds of the court and jury, to the extent that an allegation has been proven. e of long-term indebtedness. (sometimes erroneously referred to as a performance bond Bond issued at the request of one party to a contract in favor of the other party to the contract to protect the other party against loss in the event of default on the contract by the requesting party. ) on every federal contract. This provides an alternative source of payment for those supplying materials or services to a federal public project.

All federal, state, and municipal construction con-tracts over a specified dollar amount require the posting of a payment bond. Posting the bond eliminates the supplier's right to impose a mechanics lien on the job in the event of nonpayment. Payment bonds are governed by federal or state statutes.

With few exceptions, all federal public construction projects are subject to the provisions of the Miller Act. It sets forth in detail the terms and conditions with respect to bonds for federal public projects. Although the statute A law passed by the legislative body of the state. is detailed in certain areas, case law has developed with respect to the interpretation of not only the detailed provisions, but also those areas found to be incomplete or ambiguous by the courts.

(Source: Manual of Credit and Commercial Laws, edited by Charles M. Tatelbaum and John K. Pearson)