As Reported by the Senate Insurance, Commerce and Labor Committee 1
122nd General Assembly 4
Regular Session Sub. 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 and to establish new 16
requirements and limitations relative to 17
exercising rights under a bond for certain public 18
improvements.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 20
Section 1. That sections 153.56 and 2305.31 be amended and 22
section 4113.62 of the Revised Code be enacted to read as 23
follows: 24
Sec. 153.56. (A) Any person to whom any money is due for 33
labor or work performed or materials furnished in a public 35
improvement as provided in section 153.54 of the Revised Code, at 36
any time after performing the labor or work or furnishing the 37
materials, but not later than ninety days after the acceptance of 38
the public improvement by the duly authorized board or officer,
shall furnish the sureties on the bond, a statement of the amount 39
due to the person.
(B) A suit shall not be brought against sureties on the 41
bond until after sixty days after the furnishing of the statement 43
described in DIVISION (A) OF this section. If the indebtedness 45
is not paid in full at the expiration of that sixty days, AND IF 46
THE PERSON COMPLIES WITH DIVISION (C) OF THIS SECTION, the person 48
may bring an action in his THE PERSON'S own name upon the bond, 49
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as provided in sections 2307.06 and 2307.07 of the Revised Code, 50
that action to be commenced, notwithstanding section 2305.12 of 51
the Revised Code, not later than one year from the date of 52
acceptance of the public improvement.
(C) TO EXERCISE RIGHTS UNDER THIS SECTION, A SUBCONTRACTOR 55
OR MATERIALS SUPPLIER WHO IS NOT IN DIRECT PRIVITY OF CONTRACT 56
WITH THE PRINCIPAL CONTRACTOR FOR THE PUBLIC IMPROVEMENT SHALL 57
SERVE A NOTICE OF FURNISHING UPON THE PRINCIPAL CONTRACTOR IN THE 58
FORM PROVIDED IN SECTION 1311.261 OF THE REVISED CODE. 60
(D) A SUBCONTRACTOR OR MATERIALS SUPPLIER WHO SERVES A 63
NOTICE OF FURNISHING UNDER DIVISION (C) OF THIS SECTION AS 64
REQUIRED TO EXERCISE RIGHTS UNDER THIS SECTION HAS THE RIGHT OF 65
RECOVERY ONLY AS TO AMOUNTS OWED FOR LABOR AND WORK PERFORMED AND 66
MATERIALS FURNISHED DURING AND AFTER THE TWENTY-ONE DAYS 67
IMMEDIATELY PRECEDING SERVICE OF THE NOTICE OF FURNISHING. 68
(E) FOR PURPOSES OF THIS SECTION, "PRINCIPAL CONTRACTOR" 71
HAS THE SAME MEANING AS IN SECTION 1311.25 OF THE REVISED CODE. 73
Sec. 2305.31. A covenant, promise, agreement, or 82
understanding in, or in connection with or collateral to, a 83
contract or agreement relative to the design, planning, 84
construction, alteration, repair, or maintenance of a building, 85
structure, highway, road, appurtenance, and appliance, including
moving, demolition, and excavating connected therewith, pursuant 86
to which contract or agreement the promisee, or its independent 87
contractors, agents, or employees has hired the promisor to 88
perform work, purporting to indemnify the promisee, its 90
independent contractors, agents, employees, or indemnitees
against liability for damages arising out of bodily injury to 92
persons or damage to property initiated or proximately caused by 93
or resulting from the negligence of the promisee, its independent 94
contractors, agents, employees, or indemnitees is against public 95
policy and is void. Nothing
NOTHING in this section shall prohibit any person from 98
purchasing insurance from an insurance company authorized to do 99
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business in the state of Ohio for his THE PERSON'S own protection 100
or from purchasing a construction bond. 101
Sec. 4113.62. (A) ANY PROVISION OF A CONSTRUCTION 104
CONTRACT, AGREEMENT, OR UNDERSTANDING THAT WAIVES RIGHTS UNDER A 105
SURETY BOND IS VOID AND UNENFORCEABLE AS AGAINST PUBLIC POLICY. 106
(B) ANY PROVISION OF A CONSTRUCTION CONTRACT, AGREEMENT, 109
OR UNDERSTANDING, OR SPECIFICATION OR OTHER DOCUMENTATION THAT IS 110
MADE A PART OF A CONSTRUCTION CONTRACT, AGREEMENT, OR 111
UNDERSTANDING, THAT WAIVES ANY PENDING OR ASSERTED CLAIM ON THE 112
BASIS OF FINAL PAYMENT MADE FROM ONE PERSON TO ANOTHER FOR THE 113
CONSTRUCTION CONTRACT, AGREEMENT, OR UNDERSTANDING, IS VOID AND 114
UNENFORCEABLE AS AGAINST PUBLIC POLICY, WHEN THE PERSON AGAINST 115
WHOM THE CLAIM IS PENDING OR ASSERTED HAS RECEIVED NOTICE OF THAT 116
PENDING OR ASSERTED CLAIM. 117
(C)(1) ANY PROVISION OF A CONSTRUCTION CONTRACT, 120
AGREEMENT, OR UNDERSTANDING, OR SPECIFICATION OR OTHER 121
DOCUMENTATION THAT IS MADE A PART OF A CONSTRUCTION CONTRACT, 122
AGREEMENT, OR UNDERSTANDING, THAT WAIVES OR PRECLUDES LIABILITY 123
FOR DELAY DURING THE COURSE OF A CONSTRUCTION CONTRACT WHEN THE 124
CAUSE OF THE DELAY IS A PROXIMATE RESULT OF THE OWNER'S ACT OR 125
FAILURE TO ACT, OR THAT WAIVES ANY OTHER REMEDY FOR A 126
CONSTRUCTION CONTRACT WHEN THE CAUSE OF THE DELAY IS A PROXIMATE
RESULT OF THE OWNER'S ACT OR FAILURE TO ACT, IS VOID AND 127
UNENFORCEABLE AS AGAINST PUBLIC POLICY. 128
(2) ANY PROVISION OF A CONSTRUCTION SUBCONTRACT AGREEMENT, 130
OR UNDERSTANDING, OR SPECIFICATION OR OTHER DOCUMENTATION THAT IS 131
MADE PART OF A CONSTRUCTION SUBCONTRACT, AGREEMENT, OR 132
UNDERSTANDING, THAT WAIVES OR PRECLUDES LIABILITY FOR DELAY 133
DURING THE COURSE OF A CONSTRUCTION SUBCONTRACT WHEN THE CAUSE OF 134
THE DELAY IS A PROXIMATE RESULT OF THE OWNER'S OR CONTRACTOR'S 135
ACT OR FAILURE TO ACT, OR THAT WAIVES ANY OTHER REMEDY FOR A 136
CONSTRUCTION SUBCONTRACT WHEN THE CAUSE OF THE DELAY IS A
PROXIMATE RESULT OF THE OWNER'S OR CONTRACTOR'S ACT OR FAILURE TO 137
ACT, IS VOID AND UNENFORCEABLE AS AGAINST PUBLIC POLICY. 138
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(D) NOTHING IN THIS SECTION SHALL BE CONSTRUED TO DO ANY 141
OF THE FOLLOWING:
(1) PROHIBIT A CONSTRUCTION CONTRACT, AGREEMENT, OR 143
UNDERSTANDING FROM PROVIDING THAT PAYMENT FROM A CONTRACTOR TO A 144
SUBCONTRACTOR OR MATERIALS SUPPLIER, OR FROM A SUBCONTRACTOR TO A 145
MATERIALS SUPPLIER, LOWER TIER SUBCONTRACTOR, OR LOWER TIER 146
MATERIALS SUPPLIER, IS CONTINGENT OR CONDITIONED UPON RECEIPT OF 147
PAYMENT FROM ANY OTHER PERSON; 148
(2) PROHIBIT A PERSON FROM FILING A CLAIM TO PROTECT 150
RIGHTS UNDER SECTIONS 153.56, 1311.06, AND 1311.26 OF THE REVISED 152
CODE FROM EXPIRING DURING THE PENDENCY OF RECEIPT OF PAYMENT THAT 154
IS CONTINGENT OR CONDITIONED AS DESCRIBED IN DIVISION (D)(1) OF 156
THIS SECTION;
(3) CREATE A LIABILITY FOR A SURETY ON A BOND THAT IS 158
GREATER THAN THAT OF ITS PRINCIPAL, OR LIMIT THE AVAILABILITY TO 159
A SURETY OF ANY DEFENSES AVAILABLE TO ITS PRINCIPAL. 160
(E) AS USED IN THIS SECTION: 163
(1) "CONTRACTOR" AND "LOWER TIER SUBCONTRACTOR" HAVE THE 166
SAME MEANINGS AS IN SECTION 4113.61 OF THE REVISED CODE. 169
(2) "MATERIALS SUPPLIER" INCLUDES ANY PERSON BY WHOM ANY 171
MATERIALS ARE FURNISHED IN FURTHERANCE OF AN IMPROVEMENT. 172
(3) "LOWER TIER MATERIALS SUPPLIER" MEANS A MATERIALS 174
SUPPLIER WHO IS NOT IN PRIVITY OF CONTRACT WITH A CONTRACTOR BUT 175
IS IN PRIVITY OF CONTRACT WITH ANOTHER SUBCONTRACTOR OR A 176
MATERIALS SUPPLIER.
(4) "SUBCONTRACTOR," "IMPROVEMENT," AND "MATERIALS" HAVE 178
THE SAME MEANINGS AS IN SECTION 1311.01 OF THE REVISED CODE. 179
Section 2. That existing sections 153.56 and 2305.31 of 181
the Revised Code are hereby repealed. 182