As Passed by the Senate 1 122nd General Assembly 4 Regular Session Am. 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 inhisTHE PERSON'S own name upon the bond, 49 2 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.NothingNOTHING in this section shall prohibit any person from 98 purchasing insurance from an insurance company authorized to do 99 3 business in the state of Ohio forhisTHE 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, 130 AGREEMENT, OR UNDERSTANDING, OR SPECIFICATION OR OTHER 131 DOCUMENTATION THAT IS MADE PART OF A CONSTRUCTION SUBCONTRACT, 132 AGREEMENT, OR UNDERSTANDING, THAT WAIVES OR PRECLUDES LIABILITY 133 FOR DELAY DURING THE COURSE OF A CONSTRUCTION SUBCONTRACT WHEN 134 THE CAUSE OF THE DELAY IS A PROXIMATE RESULT OF THE OWNER'S OR 135 CONTRACTOR'S ACT OR FAILURE TO ACT, OR THAT WAIVES ANY OTHER REMEDY FOR A CONSTRUCTION SUBCONTRACT WHEN THE CAUSE OF THE DELAY 136 IS A PROXIMATE RESULT OF THE OWNER'S OR CONTRACTOR'S ACT OR 137 FAILURE TO ACT, IS VOID AND UNENFORCEABLE AS AGAINST PUBLIC 138 4 POLICY. (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