1998 Legislation
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HOUSE BILL NO. 535 – Subcontractors, payment

HOUSE BILL NO. 535

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Daily Data Tracking History



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

Bill Text


H0535


                                                                        
 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fourth Legislature                 Second Regular Session - 1998
                                                                        

                             IN 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 / Fiscal Impact


    





                           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