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H0224...........................................................by BUSINESS PUBLIC WORKS CONTRACTS - Adds to existing law relating to contracts and public works contracts to prohibit clauses in contracts which condition payment for performance on payment by a third party; and to provide conditions for which a contractor may withhold a reasonable amount of payment from a subcontractor. 02/12 House intro - 1st rdg - to printing 02/15 Rpt prt - to Bus
H0224|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature First Regular Session - 1999IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 224 BY BUSINESS COMMITTEE 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 AND TO PROVIDE CONDITIONS FOR WHICH A CONTRAC- 6 TOR MAY WITHHOLD A REASONABLE AMOUNT OF PAYMENT FROM A SUBCONTRACTOR; AND 7 AMENDING CHAPTER 19, TITLE 54, IDAHO CODE, BY THE ADDITION OF A NEW SEC- 8 TION 54-1931, IDAHO CODE, TO PROHIBIT CLAUSES IN CONTRACTS WHICH CONDITION 9 PAYMENT FOR PERFORMANCE ON PAYMENT BY A THIRD PARTY AND TO PROVIDE CONDI- 10 TIONS FOR WHICH A CONTRACTOR MAY WITHHOLD A REASONABLE AMOUNT OF PAYMENT 11 FROM A SUBCONTRACTOR. 12 Be It Enacted by the Legislature of the State of Idaho: 13 SECTION 1. That Chapter 1, Title 29, Idaho Code, be, and the same is 14 hereby amended by the addition thereto of a NEW SECTION , to be 15 known and designated as Section 29-116, Idaho Code, and to read as follows: 16 29-116. PAYMENT OF SUBCONTRACTORS AND SUPPLIERS. (1) Performance by a 17 subcontractor or supplier in accordance with the provisions of his contract 18 shall entitle him to a payment from the party with whom he contracts. Payment 19 by the owner to a contractor is not a condition precedent for payment to a 20 subcontractor or supplier, and payment by a contractor to a subcontractor is 21 not a condition precedent for payment to any other subcontractor or supplier, 22 and an agreement to the contrary is unenforceable. 23 (2) Nothing in this section shall prevent the contractor from withholding 24 payment to the subcontractor in an amount reasonably calculated to compensate 25 for: unsatisfactory job progress, defective construction not remedied, dis- 26 puted work, third party claims filed or reasonable evidence that such claims 27 will be filed, failure of subcontractor to make timely payments for labor, 28 equipment and materials, damage to contractor or another subcontractor, rea- 29 sonable evidence that the subcontract cannot be completed for the unpaid bal- 30 ance of the subcontract sum, or, subject to the provisions of section 54-1926, 31 Idaho Code, a reasonable amount for retainage not to exceed the retainage 32 under the contract with the contracting body. 33 SECTION 2. That Chapter 19, Title 54, Idaho Code, be, and the same is 34 hereby amended by the addition thereto of a NEW SECTION , to be 35 known and designated as Section 54-1931, Idaho Code, and to read as follows: 36 54-1931. PAYMENT OF SUBCONTRACTORS AND SUPPLIERS. (1) Performance by a 37 subcontractor or supplier in accordance with the provisions of his contract 38 shall entitle him to a payment from the party with whom he contracts. Payment 39 by the owner to a contractor is not a condition precedent for payment to a 40 subcontractor or supplier, and payment by a contractor to a subcontractor is 41 not a condition precedent for payment to any other subcontractor or supplier, 2 1 and an agreement to the contrary is unenforceable. 2 (2) Nothing in this section shall prevent the contractor from withholding 3 payment to the subcontractor in an amount reasonably calculated to compensate 4 for: unsatisfactory job progress, defective construction not remedied, dis- 5 puted work, third party claims filed or reasonable evidence that such claims 6 will be filed, failure of subcontractor to make timely payments for labor, 7 equipment and materials, damage to contractor or another subcontractor, rea- 8 sonable evidence that the subcontract cannot be completed for the unpaid bal- 9 ance of the subcontract sum, or, subject to the provisions of section 54-1926, 10 Idaho Code, a reasonable amount for retainage not to exceed the retainage 11 under the contract with the contracting body.
STATEMENT OF PURPOSE
RS08861
This legislation 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 for work
completed.
FISCAL NOTE
None.
Contact: Rep. Lee Gagner (208) 332-1248
STATEMENT OF PURPOSE/FISCAL NOTE H 224