As Introduced 1
122nd General Assembly 4
Regular Session S. B. No. 71 5
1997-1998 6
SENATOR CUPP 8
10
A B I L L
To amend sections 153.56 and 2305.31 and to enact 12
section 4113.62 of the Revised Code to void 13
various types of provisions of a construction 14
contract or subcontract that are considered to be
against public policy, to prohibit construction 16
contracts from requiring the purchasing of
specified liability insurance, and to establish 17
new requirements and limitations relative to 18
exercising rights under a bond for certain public 19
improvements.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 21
Section 1. That sections 153.56 and 2305.31 be amended and 23
section 4113.62 of the Revised Code be enacted to read as 24
follows: 25
Sec. 153.56. (A) Any person to whom any money is due for 34
labor or work performed or materials furnished in a public 36
improvement as provided in section 153.54 of the Revised Code, at 37
any time after performing the labor or work or furnishing the 38
materials, but not later than ninety days after the acceptance of 39
the public improvement by the duly authorized board or officer,
shall furnish the sureties on the bond, a statement of the amount 40
due to the person.
(B) A suit shall not be brought against sureties on the 42
bond until after sixty days after the furnishing of the statement 44
described in DIVISION (A) OF this section. If the indebtedness 46
is not paid in full at the expiration of that sixty days, AND IF 47
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THE PERSON COMPLIES WITH DIVISION (C) OF THIS SECTION, the person 49
may bring an action in his THE PERSON'S own name upon the bond, 50
as provided in sections 2307.06 and 2307.07 of the Revised Code, 51
that action to be commenced, notwithstanding section 2305.12 of 52
the Revised Code, not later than one year from the date of 53
acceptance of the public improvement.
(C) TO EXERCISE RIGHTS UNDER THIS SECTION, A SUBCONTRACTOR 56
OR MATERIALS SUPPLIER WHO IS NOT IN DIRECT PRIVITY OF CONTRACT 57
WITH THE PRINCIPAL CONTRACTOR FOR THE PUBLIC IMPROVEMENT SHALL 58
SERVE A NOTICE OF FURNISHING UPON THE PRINCIPAL CONTRACTOR IN THE 59
FORM PROVIDED IN SECTION 1311.261 OF THE REVISED CODE. 61
(D) A SUBCONTRACTOR OR MATERIALS SUPPLIER WHO SERVES A 64
NOTICE OF FURNISHING UNDER DIVISION (C) OF THIS SECTION AS 65
REQUIRED TO EXERCISE RIGHTS UNDER THIS SECTION HAS THE RIGHT OF 66
RECOVERY ONLY AS TO AMOUNTS OWED FOR LABOR AND WORK PERFORMED AND 67
MATERIALS FURNISHED DURING AND AFTER THE TWENTY-ONE DAYS 68
IMMEDIATELY PRECEDING SERVICE OF THE NOTICE OF FURNISHING. 69
(E) FOR PURPOSES OF THIS SECTION, "PRINCIPAL CONTRACTOR" 72
HAS THE SAME MEANING AS IN SECTION 1311.25 OF THE REVISED CODE. 74
Sec. 2305.31. A covenant, promise, agreement, or 83
understanding in, or in connection with or collateral to, a 84
contract or agreement relative to the design, planning, 85
construction, alteration, repair, or maintenance of a building, 86
structure, highway, road, appurtenance, and appliance, including
moving, demolition, and excavating connected therewith, pursuant 87
to which contract or agreement the promisee, or its independent 88
contractors, agents, or employees has hired the promisor to 89
perform work, purporting to indemnify the promisee, its 91
independent contractors, agents, employees, or indemnitees
against liability for damages, OR FOR COSTS AND EXPENSES RELATED 92
TO THOSE DAMAGES, arising out of bodily injury to persons or 93
damage to property initiated or proximately caused by or 94
resulting from the negligence of the promisee, its independent 95
contractors, agents, employees, or indemnitees is against public 96
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policy and is void. Nothing
NOTHING in this section shall prohibit any person from 99
purchasing insurance from an insurance company authorized to do 100
business in the state of Ohio for his THE PERSON'S own protection 101
or from purchasing a construction bond, EXCEPT THAT NO CONTRACT 102
OR AGREEMENT SHALL REQUIRE THE PROMISOR TO PURCHASE INSURANCE 104
AGAINST LIABILITY FOR DAMAGES, OR FOR COSTS AND EXPENSES, 106
INCLUDING ATTORNEY'S FEES, RELATED TO THOSE DAMAGES, PROXIMATELY 107
CAUSED BY OR RESULTING FROM THE NEGLIGENCE OF THE PROMISEE, ITS 108
INDEPENDENT CONTRACTORS, AGENTS, EMPLOYEES, OR INDEMNITEES, 109
UNLESS THE CONTRACT PROVIDES THAT THE PROMISEE SHALL COMPENSATE
THE PROMISOR FOR ADDITIONAL COSTS INCURRED BY THE PROMISOR AS A 110
RESULT OF CLAIMS AGAINST SUCH INSURANCE. 111
Sec. 4113.62. (A) ANY PROVISION OF A CONSTRUCTION 114
CONTRACT, AGREEMENT, OR UNDERSTANDING THAT WAIVES RIGHTS UNDER A 115
SURETY BOND IS VOID AND UNENFORCEABLE AS AGAINST PUBLIC POLICY. 116
(B) ANY PROVISION OF A CONSTRUCTION CONTRACT, AGREEMENT, 119
OR UNDERSTANDING, OR SPECIFICATION OR OTHER DOCUMENTATION THAT IS 120
MADE A PART OF A CONSTRUCTION CONTRACT, AGREEMENT, OR 121
UNDERSTANDING, THAT WAIVES ANY PENDING OR ASSERTED CLAIM ON THE 122
BASIS OF FINAL PAYMENT MADE FROM ONE PERSON TO ANOTHER FOR THE 123
CONSTRUCTION CONTRACT, AGREEMENT, OR UNDERSTANDING, IS VOID AND 124
UNENFORCEABLE AS AGAINST PUBLIC POLICY, WHEN THE PERSON AGAINST 125
WHOM THE CLAIM IS PENDING OR ASSERTED HAS RECEIVED NOTICE OF THAT 126
PENDING OR ASSERTED CLAIM. 127
(C)(1) ANY PROVISION OF A CONSTRUCTION CONTRACT, 130
AGREEMENT, OR UNDERSTANDING, OR SPECIFICATION OR OTHER 131
DOCUMENTATION THAT IS MADE A PART OF A CONSTRUCTION CONTRACT, 132
AGREEMENT, OR UNDERSTANDING, THAT WAIVES OR PRECLUDES LIABILITY 133
FOR DELAY DURING THE COURSE OF A CONSTRUCTION CONTRACT WHEN THE 134
CAUSE OF THE DELAY IS A PROXIMATE RESULT OF THE OWNER'S ACT OR 135
FAILURE TO ACT, OR THAT WAIVES ANY OTHER REMEDY FOR A 136
CONSTRUCTION CONTRACT WHEN THE CAUSE OF THE DELAY IS A PROXIMATE
RESULT OF THE OWNER'S ACT OR FAILURE TO ACT, IS VOID AND 137
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UNENFORCEABLE AS AGAINST PUBLIC POLICY. 138
(2) ANY PROVISION OF A CONSTRUCTION SUBCONTRACT AGREEMENT, 140
OR UNDERSTANDING, OR SPECIFICATION OR OTHER DOCUMENTATION THAT IS 141
MADE PART OF A CONSTRUCTION SUBCONTRACT, AGREEMENT, OR 142
UNDERSTANDING, THAT WAIVES OR PRECLUDES LIABILITY FOR DELAY 143
DURING THE COURSE OF A CONSTRUCTION SUBCONTRACT WHEN THE CAUSE OF 144
THE DELAY IS A PROXIMATE RESULT OF THE OWNER'S OR CONTRACTOR'S 145
ACT OR FAILURE TO ACT, OR THAT WAIVES ANY OTHER REMEDY FOR A 146
CONSTRUCTION SUBCONTRACT WHEN THE CAUSE OF THE DELAY IS A
PROXIMATE RESULT OF THE OWNER'S OR CONTRACTOR'S ACT OR FAILURE TO 147
ACT, IS VOID AND UNENFORCEABLE AS AGAINST PUBLIC POLICY. 148
(D) NOTHING IN THIS SECTION SHALL BE CONSTRUED TO DO ANY 151
OF THE FOLLOWING:
(1) PROHIBIT A CONSTRUCTION CONTRACT, AGREEMENT, OR 153
UNDERSTANDING FROM PROVIDING THAT PAYMENT FROM A CONTRACTOR TO A 154
SUBCONTRACTOR OR MATERIALS SUPPLIER, OR FROM A SUBCONTRACTOR TO A 155
MATERIALS SUPPLIER, LOWER TIER SUBCONTRACTOR, OR LOWER TIER 156
MATERIALS SUPPLIER, IS CONTINGENT OR CONDITIONED UPON RECEIPT OF 157
PAYMENT FROM ANY OTHER PERSON; 158
(2) PROHIBIT A PERSON FROM FILING A CLAIM TO PROTECT 160
RIGHTS UNDER SECTIONS 153.56, 1311.06, AND 1311.26 OF THE REVISED 162
CODE FROM EXPIRING DURING THE PENDENCY OF RECEIPT OF PAYMENT THAT 164
IS CONTINGENT OR CONDITIONED AS DESCRIBED IN DIVISION (D)(1) OF 166
THIS SECTION;
(3) CREATE A LIABILITY FOR A SURETY ON A BOND THAT IS 168
GREATER THAN THAT OF ITS PRINCIPAL, OR LIMIT THE AVAILABILITY TO 169
A SURETY OF ANY DEFENSES AVAILABLE TO ITS PRINCIPAL. 170
(E) AS USED IN THIS SECTION: 173
(1) "CONTRACTOR" AND "LOWER TIER SUBCONTRACTOR" HAVE THE 176
SAME MEANINGS AS IN SECTION 4113.61 OF THE REVISED CODE. 179
(2) "MATERIALS SUPPLIER" INCLUDES ANY PERSON BY WHOM ANY 181
MATERIALS ARE FURNISHED IN FURTHERANCE OF AN IMPROVEMENT. 182
(3) "LOWER TIER MATERIALS SUPPLIER" MEANS A MATERIALS 184
SUPPLIER WHO IS NOT IN PRIVITY OF CONTRACT WITH A CONTRACTOR BUT 185
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IS IN PRIVITY OF CONTRACT WITH ANOTHER SUBCONTRACTOR OR A 186
MATERIALS SUPPLIER.
(4) "SUBCONTRACTOR," "IMPROVEMENT," AND "MATERIALS" HAVE 188
THE SAME MEANINGS AS IN SECTION 1311.01 OF THE REVISED CODE. 189
Section 2. That existing sections 153.56 and 2305.31 of 191
the Revised Code are hereby repealed. 192