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H0535.............................................................by GAGNER
SUBCONTRACTORS - Adds to existing law relating to general contracts and
public works contracts to prohibit clauses in contracts which condition
payment for performance on payment by a third party, to provide for timing
for payment due, to provide for payment of interest on unpaid balances and
to provide conditions for which a contractor may withhold a reasonable
amount of payment from a subcontractor.
01/28 House intro - 1st rdg - to printing
01/29 Rpt prt - to Bus
02/12 Rpt out - rec d/p - to 2nd rdg
02/13 2nd rdg - to 3rd rdg
02/17 3rd rdg - PASSED - 66-0-4
AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Bivens,
Black(15), Boe, Bruneel, Callister, Campbell, Chase, Clark, Crane,
Crow, Cuddy, Deal, Denney, Ellsworth, Field(13), Field(20), Gagner,
Geddes, Gould, Hadley, Hansen, Henbest, Hornbeck, Jaquet, Jones(9),
Jones(22), Jones(20), Judd, Kellogg, Kempton, Kendell, Kjellander,
Kunz, Lake, Linford, Loertscher, Mader, Marley, McKague, Meyer,
Miller, Mortensen, Newcomb, Pischner, Pomeroy, Reynolds, Richman,
Ridinger, Robison, Sali, Schaefer, Stevenson, Stoicheff, Taylor,
Tilman, Tippets, Trail, Watson, Wheeler, Wood, Zimmermann
NAYS -- None
Absent and excused -- Black(23), Stone, Stubbs, Mr Speaker
Floor Sponsor - Gagner
Title apvd - to Senate
02/18 Senate intro - 1st rdg - to Com/HuRes
H0535|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 535 BY GAGNER 1 AN ACT 2 RELATING TO GENERAL CONTRACTS AND PUBLIC WORKS CONTRACTS; AMENDING CHAPTER 1, 3 TITLE 29, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 29-116, IDAHO CODE, 4 TO PROHIBIT CLAUSES IN CONTRACTS WHICH CONDITION PAYMENT FOR PERFORMANCE 5 ON PAYMENT BY A THIRD PARTY, TO PROVIDE THE TIMING FOR PAYMENT DUE, TO 6 PROVIDE FOR PAYMENT OF INTEREST ON UNPAID BALANCES AND TO PROVIDE CONDI- 7 TIONS FOR WHICH A CONTRACTOR MAY WITHHOLD A REASONABLE AMOUNT OF PAYMENT 8 FROM A SUBCONTRACTOR; AND AMENDING CHAPTER 19, TITLE 54, IDAHO CODE, BY 9 THE ADDITION OF A NEW SECTION 54-1931, IDAHO CODE, TO PROHIBIT CLAUSES IN 10 CONTRACTS WHICH CONDITION PAYMENT FOR PERFORMANCE ON PAYMENT BY A THIRD 11 PARTY, TO PROVIDE THE TIMING FOR PAYMENT DUE, TO PROVIDE FOR PAYMENT OF 12 INTEREST ON UNPAID BALANCES AND TO PROVIDE CONDITIONS FOR WHICH A CONTRAC- 13 TOR MAY WITHHOLD A REASONABLE AMOUNT OF PAYMENT FROM A SUBCONTRACTOR. 14 Be It Enacted by the Legislature of the State of Idaho: 15 SECTION 1. That Chapter 1, Title 29, Idaho Code, be, and the same is 16 hereby amended by the addition thereto of a NEW SECTION , to be 17 known and designated as Section 29-116, Idaho Code, and to read as follows: 18 29-116. PAYMENT OF SUBCONTRACTORS AND SUPPLIERS. (1) Performance by a 19 subcontractor or supplier in accordance with the provisions of his contract 20 shall entitle him to a payment from the party with whom he contracts. Payment 21 by the owner to a contractor is not a condition precedent for payment to a 22 subcontractor or supplier, and payment by a contractor to a subcontractor is 23 not a condition precedent for payment to any other subcontractor or supplier, 24 and an agreement to the contrary is unenforceable. 25 (2) When a subcontractor or supplier has performed in accordance with the 26 provisions of his contract, the contractor shall pay his subcontractor or sup- 27 plier and each subcontractor shall pay his subcontractor or supplier within 28 ten (10) days of receipt by the contractor or subcontractor of each periodic 29 or final payment, or such earlier time set forth in the subcontract, the full 30 amount received for such subcontractor's or supplier's work and materials 31 based on work completed or service provided under the subcontract. If no time 32 for payment is specified in the subcontract and unless payment by the owner or 33 contractor is earlier received, periodic or final payment to a subcontractor 34 or supplier shall be made not later than seventy-five (75) days following sub- 35 mittal of his request for payment. 36 (3) Should any periodic or final payment not be made within the time 37 specified in subsection (2) of this section, interest shall accrue, beginning 38 on the next calendar day, at the rate of one and one-half percent (1 1/2%) per 39 month or a fraction thereof, on such unpaid balance as may be due. 40 (4) Nothing in this section shall prevent the contractor from withholding 41 payment to the subcontractor in an amount reasonably calculated to compensate 42 for: unsatisfactory job progress, defective construction not remedied, dis- 43 puted work, third party claims filed or reasonable evidence that such claims 2 1 will be filed, failure of subcontractor to make timely payments for labor, 2 equipment and materials, damage to contractor or another subcontractor, rea- 3 sonable evidence that subcontract cannot be completed for the unpaid balance 4 of the subcontract sum, or, subject to the provisions of section 54-1926, 5 Idaho Code, a reasonable amount for retainage not to exceed the retainage 6 under the contract with the contracting body. 7 SECTION 2. That Chapter 19, Title 54, Idaho Code, be, and the same is 8 hereby amended by the addition thereto of a NEW SECTION , to be 9 known and designated as Section 54-1931, Idaho Code, and to read as follows: 10 54-1931. PAYMENT OF SUBCONTRACTORS AND SUPPLIERS. (1) Performance by a 11 subcontractor or supplier in accordance with the provisions of his contract 12 shall entitle him to a payment from the party with whom he contracts. Payment 13 by the owner to a contractor is not a condition precedent for payment to a 14 subcontractor or supplier, and payment by a contractor to a subcontractor is 15 not a condition precedent for payment to any other subcontractor or supplier, 16 and an agreement to the contrary is unenforceable. 17 (2) When a subcontractor or supplier has performed in accordance with the 18 provisions of his contract, the contractor shall pay his subcontractor or sup- 19 plier and each subcontractor shall pay his subcontractor or supplier within 20 ten (10) days of receipt by the contractor or subcontractor of each periodic 21 or final payment, or such earlier time set forth in the subcontract, the full 22 amount received for such subcontractor's or supplier's work and materials 23 based on work completed or service provided under the subcontract. If no time 24 for payment is specified in the subcontract and unless payment by the owner or 25 contractor is earlier received, periodic or final payment to a subcontractor 26 or supplier shall be made not later than seventy-five (75) days following sub- 27 mittal of his request for payment. 28 (3) Should any periodic or final payment not be made within the time 29 specified in subsection (2) of this section, interest shall accrue, beginning 30 on the next calendar day, at the rate of one and one-half percent (1 1/2%) per 31 month or a fraction thereof, on such unpaid balance as may be due. 32 (4) Nothing in this section shall prevent the contractor from withholding 33 payment to the subcontractor in an amount reasonably calculated to compensate 34 for: unsatisfactory job progress, defective construction not remedied, dis- 35 puted work, third party claims filed or reasonable evidence that such claims 36 will be filed, failure of subcontractor to make timely payments for labor, 37 equipment and materials, damage to contractor or another subcontractor, rea- 38 sonable evidence that subcontract cannot be completed for the unpaid balance 39 of the subcontract sum, or, subject to the provisions of section 54-1926, 40 Idaho Code, a reasonable amount for retainage not to exceed the retainage 41 under the contract with the owner.
STATEMENT OF PURPOSE
RS 07734
PAYMENT OF SUBCONTRACTORS AND SUPPLIERS: 29-116
Clarifies that payment for work performed does not depend on payment
relating to the owner/general contractor contract. Subcontractors
and suppliers are to be paid as work is completed. Prevents let
payment to subcontractors and suppliers.
FISCAL NOTE
None.
Contact: Representative Lee Gagner
332-1248
STATEMENT OF PURPOSE/FISCAL NOTE
Bill No. H 535