Court: Unless the general contractor objects within 14 days, an Arizona subcontractor’s invoice may be deemed valid

Brian Pouderoyen • March 20, 2026

The Arizona Court of Appeals’ application of Arizona’s Prompt Payment Act produces a favorable decision for subcontractors.

Brian Pouderoyen

Brian Pouderoyen


Appellate court decisions that apply Arizona’s Prompt Payment Act are rare. As a result, the Arizona Court of Appeals’ recent memorandum decision in Canon v. Retail, which delivered a good outcome for subcontractors, is worthy of attention. 


In a nutshell, the decision gives Arizona subcontractors a valid argument that, if a general contractor does not object to their invoice within 14 days of receipt, that invoice may be legally deemed as approved.


Background. In 2021, Retail Contracting Group was the general contractor on a construction project at a LensCrafters store in Scottsdale. Retail Contracting subcontracted the electrical work to Canon Electric for $91,000, which, with change orders, increased to $99,100.


Of significance to the eventual legal dispute, the subcontract contained several 24-hour notice provisions. One such provision required Retail Contracting, before claiming breach of contract and terminating Canon Electric, to give to Canon:


  • written notice of any failure to comply and
  • 24 hours to cure the failure.


Canon started its work on the project and, per the subcontract invoicing schedule, submitted three invoices: $40,900 on September 20; $40,900 on November 19; and the remaining $17,300 on December 11, the contractual completion date.


Meanwhile, Retail periodically invoiced the project owner, with the final invoice certifying that all work – including the electrical – was complete.


The owner paid Retail in full; however, Retail paid none of Canon’s invoices.


Dispute. Shortly after issuing its final invoice on December 11, Canon stopped work on the project, having completed, it later argued, “almost all” of the electrical work in a “timely and workmanlike manner.”


On February 1, 2022, still unpaid, Canon issued a three-day stop work notice, pursuant to Arizona’s Prompt Payment Act, and a notice of intent to lien.


In August 2022, Canon sued Retail for breaches of contract for nonpayment, violations of the Prompt Payment Act, and, specific to section 4(G) of the contract, failures to give (a) written notice of failure to meet standards of workmanship and (b) 24 hours to cure.


Retail countersued, alleging breach of contract and breach of the implied warranty of workmanship. Retail argued that Canon committed the first material breach of the subcontract (for stopping work) and, later, failed to cure defective workmanship. Retail claimed that, because of Canon’s work stoppage and failure to cure the defects, Retail was forced to hire, at a cost of $145,000, another electrical contractor to finish the job. Retail sought a net $45,900 from Canon – the cost of the replacement contractor less Canon’s invoices.


Appeal. In March 2024, Canon filed a motion for summary judgment. In August, the trial court granted Canon’s motion and ordered Retail to pay to Canon its damages, interest, and attorneys’ fees.


Retail Contracting appealed, and the Arizona Court of Appeals upheld the trial court’s decision.


The Court of Appeals’ decision in Canon v. Retail is straightforward, and it is notable for the Court’s interpretation of the Prompt Payment Act’s notice requirements in cases where the general contractor objects to a subcontractor’s invoice.


In its decision, the Court states that, under the Prompt Payment Act:


  • “Retail was required to either (1) pay Canon’s invoices received within seven days of being paid by the owner … or (2) withhold payment and ‘prepare and issue a written statement’ to Canon detailing the reasons for doing so within 14 days of receiving Canon’s invoices (emphasis added).” 


Although there were other bases for the Court to find that Retail owed Canon payment for its invoices, the decision implies that Retail was obligated to pay Canon’s invoices simply because Retail did not object to them within 14 days of receipt.


Some construction professionals will not agree that the Act – particularly A.R.S. § 32-1183(E) relating to subcontractors’ invoices – has such a requirement, and they will disagree with the Court’s interpretation.


Nevertheless, even though Canon v. Retail is not an official “Opinion” of the Court, it can still carry sway with judges, and it gives Arizona subcontractors a facially valid argument that, if a general contractor does not object within 14 days of receipt of a subcontractor’s invoice, that invoice may be legally deemed as approved, and therefore due and owing.


Questions? Contact Brian Pouderoyen by email.