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S1235......................................................by STATE AFFAIRS CONSTRUCTION CONTRACTS - Amends existing law to provide that certain clauses in a construction contract are void because such clauses are contrary to public policy; and to prohibit construction contract clauses which waive, release or extinguish the rights of a public works contractor to seek damages or equitable adjustment arising out of an unreasonable delay in performance 02/23 Senate intro - 1st rdg - to printing 02/24 Rpt prt - to Com/HuRes 02/26 Rpt out - rec d/p - to 2nd rdg 03/01 2nd rdg - to 3rd rdg 03/04 Ret'd to Comm/HuRes
S1235|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature First Regular Session - 1999IN THE SENATE SENATE BILL NO. 1235 BY STATE AFFAIRS COMMITTEE 1 AN ACT 2 RELATING TO PRIVATE AND PUBLIC CONSTRUCTION CONTRACT PROVISIONS; AMENDING SEC- 3 TION 29-115, IDAHO CODE, TO PROVIDE THAT CERTAIN CLAUSES IN A CONSTRUCTION 4 CONTRACT ARE VOID BECAUSE SUCH CLAUSES ARE CONTRARY TO PUBLIC POLICY; AND 5 AMENDING SECTION 67-5726, IDAHO CODE, TO PROHIBIT CONSTRUCTION CONTRACT 6 CLAUSES WHICH WAIVE, RELEASE OR EXTINGUISH THE RIGHTS OF A PUBLIC WORKS 7 CONTRACTOR TO SEEK DAMAGES OR EQUITABLE ADJUSTMENT ARISING OUT OF AN 8 UNREASONABLE DELAY IN PERFORMANCE. 9 Be It Enacted by the Legislature of the State of Idaho: 10 SECTION 1. That Section 29-115, Idaho Code, be, and the same is hereby 11 amended to read as follows: 12 29-115. CONSTRUCTION CONTRACTS. (1) This section is applicable with 13 respect to all contracts entered into on or after July 1, 1990, between owners 14 and original contractors relating to the construction of any private work of 15 improvement. 16 (2) In any contract relating to the construction of any private work of 17 improvement, the retention proceeds withheld by the owner from the original 18 contractor or by the original contractor from any subcontractor from any pay- 19 ment shall not exceed five percent (5%) of the payment and in no event shall 20 the total retention withheld exceed five percent (5%) of the contract price. 21 However, the five percent (5%) maximum that may be withheld does not apply if 22 the original contractor or the subcontractor fails to provide a performance 23 bond issued by a surety acceptable to the owner or original contractor if 24 requested to do so by the owner or original contractor respectively. The five 25 percent (5%) maximum shall not apply to any contract for the performance of a 26 private work of improvement to residential real property consisting of one (1) 27 to four (4) units occupied or to be occupied by the owner. 28 (3) Within thirty-five (35) days from the date on which the work of 29 improvement is substantially complete, as mutually agreed to by the parties to 30 the contract, the retention withheld by the owner shall be reduced to the 31 lesser of one hundred fifty percent (150%) of the estimated value of work yet 32 to be completed in accordance with the contract or the retention then withheld 33 by the owner, not to exceed five percent (5%) of the contract price. 34 Within thirty-five (35) days from the date of final completion of the work 35 of improvement, the retention withheld by the owner shall be released, except 36 in the event of a dispute between the owner and the original contractor, the 37 owner may withhold from the final retention payment an amount not to exceed 38 one hundred fifty percent (150%) of the estimated value of the issue in dis- 39 pute. The owner may condition the final release of the retention upon receipt 40 of satisfactory lien waivers from all persons with actual or potential lien 41 claims on the work of improvement. 42 (4) Subject to subsection (5) of this section, within ten (10) days from 43 the time that all or any portion of the retention proceeds are received by the 2 1 original contractor, the original contractor shall pay each of its subcontrac- 2 tors from whom retention has been withheld, each subcontractor's share of the 3 retention received. However, if a retention payment received by the original 4 contractor is specifically designated for a particular subcontractor, payment 5 of the retention shall be made to the designated subcontractor. 6 (5) The original contractor shall not be required to pay the retention to 7 a subcontractor if a bona fide dispute exists between the subcontractor and 8 the original contractor. The amount withheld from the retention payment shall 9 not exceed one hundred fifty percent (150%) of the estimated value of the work 10 yet to be completed or issue in dispute. 11 (6) It shall be against public policy for any party to require any other 12 party to waive any provision of this statute , or for any clause to be 13 included in a construction contract which purports to waive, release or extin- 14 guish the right of a contractor, subcontractor or supplier to seek damages or 15 an equitable adjustment arising out of an unreasonable delay in performance, 16 which delay is caused by the acts or omissions of the contractee, or persons 17 acting for the contractee. Such a clause is void and unenforceable as a mat- 18 ter of public policy. Provided however, that a construction contract may con- 19 tain provisions for required notice of delays, arbitration or other procedure 20 for settlement and/or reasonable liquidated damages . 21 SECTION 2. That Section 67-5726, Idaho Code, be, and the same is hereby 22 amended to read as follows: 23 67-5726. PROHIBITIONS. (1) No contract or order or any interest therein 24 shall be transferred by the contractor or vendor to whom such contract or 25 order is given to any other party, without the approval in writing of the 26 administrator. Transfer of a contract without approval shall cause the annul- 27 ment of the contract so transferred, at the option of the state. All rights of 28 action, however, for any breach of such contract by the contracting parties 29 are reserved to the state. No member of the legislature or any officer or 30 employee of any branch of the state government shall directly, himself, or by 31 any other person in trust for him or for his use or benefit or on his account, 32 undertake, execute, hold or enjoy, in whole or in part, any contract or agree- 33 ment made or entered into by or on behalf of the state of Idaho, if made by, 34 through, or on behalf of the department in which he is an officer or employee; 35 or if made by, through or on behalf of any other department unless the same 36 are made after competitive bids. 37 (2) Except as provided by section 67-5718, Idaho Code, no officer or 38 employee shall influence or attempt to influence the award of a contract to a 39 particular registered vendor, or to deprive or attempt to deprive any regis- 40 tered vendor of an acquisition contract. 41 (3) No officer or employee shall conspire with a vendor or its agent, and 42 no vendor or its agent shall conspire with an officer or employee, to influ- 43 ence or attempt to influence the award of a contract, or to deprive or attempt 44 to deprive a registered vendor of an acquisition award. 45 (4) No officer or employee shall fail to utilize an open contract without 46 justifiable cause for such action. No officer or employee shall accept prop- 47 erty which he knows does not meet specifications or substantially meet the 48 original performance test results. 49 (5) Deprivation, influence or attempts thereat shall not include written 50 reports, based upon substantial evidence, sent to the administrator of the 51 division of purchasing concerning matters relating to the responsibility of 52 registered vendors. 53 (6) No vendor or related party, or subsidiary, or affiliate of a vendor 3 1 may submit a bid to obtain a contract to provide property to the state, if the 2 vendor or related party, or affiliate or subsidiary was paid for services uti- 3 lized in preparing the bid specifications or if the services influenced the 4 procurement process. 5 (7) No public works construction contract shall contain any clause 6 which purports to waive, release or extinguish the rights of a public works 7 contractor to seek damages or an equitable adjustment arising out of an unrea- 8 sonable delay in performance which delay is caused by the acts or omissions of 9 the contractee, or persons acting for the contractee. Such a clause is void 10 and unenforceable as a matter of public policy. Provided however, that a pub- 11 lic works construction contract may contain provisions for required notice of 12 delays, arbitration or other procedure for settlement, and/or reasonable liq- 13 uidated damages.
STATEMENT OF PURPOSE
RS09104
This legislation would provide that "no damage for delay"
clauses in construction contracts would be void and
unenforceable when the delay is caused by the contractee or
agents of the contractee.
FISCAL NOTE
No fiscal impact.
Senator Gordon Crow, 332-1330
STATEMENT OF PURPOSE/ FISCAL NOTE S1235