As Reported by the Senate Judiciary Committee            1            

123rd General Assembly                                             4            

   Regular Session                           Sub. H. B. No. 491    5            

      1999-2000                                                    6            


       REPRESENTATIVES WILLAMOWSKI-NETZLEY-TAYLOR-SCHULER-         8            

       TERWILLEGER-TIBERI-VAN VYVEN-WINKLER-CORBIN-EVANS-          9            

   HOLLISTER-ROMAN-HARTNETT-WILLIAMS-VERICH-DISTEL-KRUPINSKI-      10           

    HARRIS-D. MILLER-BUCHY-PERRY-YOUNG-OGG-STEVENS-JOLIVETTE-      11           

              JACOBSON-VESPER-WIDENER-SENATOR CUPP                 12           


_________________________________________________________________   14           

                          A   B I L L                                           

             To amend section 4113.62 of the Revised Code to       16           

                specify that a construction contract containing a  17           

                provision subjecting the contract to the laws of                

                another state is void.                             18           




BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:        20           

      Section 1.  That section 4113.62 of the Revised Code be      22           

amended to read as follows:                                        23           

      Sec. 4113.62.  (A)  Any provision of a construction          33           

contract, agreement, or understanding that waives rights under a   34           

surety bond is void and unenforceable as against public policy.    35           

      (B)  Any provision of a construction contract, agreement,    38           

or understanding, or specification or other documentation that is  39           

made a part of a construction contract, agreement, or              40           

understanding, that waives any pending or asserted claim on the    41           

basis of final payment made from one person to another for the     42           

construction contract, agreement, or understanding, is void and    43           

unenforceable as against public policy, when the person against    44           

whom the claim is pending or asserted has received notice of that  45           

pending or asserted claim.  Nothing in this division precludes     46           

parties to a construction contract, agreement, or understanding    47           

from entering into a subsequent settlement agreement arising from  48           

a claim under that construction contract, agreement, or            49           

                                                          2      


                                                                 
understanding.                                                                  

      (C)(1)  Any provision of a construction contract,            52           

agreement, or understanding, or specification or other             53           

documentation that is made a part of a construction contract,      54           

agreement, or understanding, that waives or precludes liability    55           

for delay during the course of a construction contract when the    56           

cause of the delay is a proximate result of the owner's act or     57           

failure to act, or that waives any other remedy for a              58           

construction contract when the cause of the delay is a proximate                

result of the owner's act or failure to act, is void and           59           

unenforceable as against public policy.                            60           

      (2)  Any provision of a construction subcontract,            62           

agreement, or understanding, or specification or other             63           

documentation that is made part of a construction subcontract,     64           

agreement, or understanding, that waives or precludes liability    65           

for delay during the course of a construction subcontract when     66           

the cause of the delay is a proximate result of the owner's or     67           

contractor's act or failure to act, or that waives any other                    

remedy for a construction subcontract when the cause of the delay  68           

is a proximate result of the owner's or contractor's act or        69           

failure to act, is void and unenforceable as against public        70           

policy.                                                                         

      (D)(1)  ANY PROVISION OF A CONSTRUCTION CONTRACT,            72           

AGREEMENT, UNDERSTANDING, OR SPECIFICATION OR OTHER DOCUMENT OR    73           

DOCUMENTATION THAT IS MADE A PART OF A CONSTRUCTION CONTRACT,      75           

SUBCONTRACT, AGREEMENT, OR UNDERSTANDING FOR AN IMPROVEMENT, OR                 

PORTION THEREOF, TO REAL ESTATE IN THIS STATE THAT MAKES THE       77           

CONSTRUCTION CONTRACT OR SUBCONTRACT, AGREEMENT, OR OTHER          78           

UNDERSTANDING SUBJECT TO THE LAWS OF ANOTHER STATE IS VOID AND     80           

UNENFORCEABLE AS AGAINST PUBLIC POLICY.                            81           

      (2)  ANY PROVISION OF A CONSTRUCTION CONTRACT, AGREEMENT,    83           

UNDERSTANDING, SPECIFICATION, OR OTHER DOCUMENT OR DOCUMENTATION   84           

THAT IS MADE A PART OF A CONSTRUCTION CONTRACT, SUBCONTRACT,       85           

AGREEMENT, OR UNDERSTANDING FOR AN IMPROVEMENT, OR PORTION         86           

                                                          3      


                                                                 
THEREOF, TO REAL ESTATE IN THIS STATE THAT REQUIRES ANY            87           

LITIGATION, ARBITRATION, OR OTHER DISPUTE RESOLUTION PROCESS       88           

PROVIDED FOR IN THE CONSTRUCTION CONTRACT, SUBCONTRACT,            89           

AGREEMENT, OR UNDERSTANDING TO OCCUR IN ANOTHER STATE IS VOID AND  90           

UNENFORCEABLE AS AGAINST PUBLIC POLICY.  ANY LITIGATION,           91           

ARBITRATION, OR OTHER DISPUTE RESOLUTION PROCESS PROVIDED FOR IN   92           

THE CONSTRUCTION CONTRACT, SUBCONTRACT, AGREEMENT, OR              93           

UNDERSTANDING SHALL TAKE PLACE IN THE COUNTY OR COUNTIES IN WHICH  94           

THE IMPROVEMENT TO REAL ESTATE IS LOCATED OR AT ANOTHER LOCATION   95           

WITHIN THIS STATE MUTUALLY AGREED UPON BY THE PARTIES.                          

      (3)  NOTHING IN THIS SECTION SHALL BE CONSTRUED TO APPLY TO  97           

ANY PROMISSORY NOTE, LOAN AGREEMENT, MORTGAGE, SECURITY            98           

AGREEMENT, ASSIGNMENT OF RENTS, OR ANY OTHER CONTRACT, AGREEMENT,  99           

UNDERSTANDING, OR OTHER DOCUMENT OR DOCUMENTATION TO WHICH A       100          

FINANCIAL INSTITUTION, AS DEFINED IN SECTION 5725.01 OF THE        102          

REVISED CODE, OR ANY AFFILIATE, AS DEFINED IN DIVISION (A)(1) OF   103          

SECTION 1109.53 OF THE REVISED CODE, IS A PARTY.                   104          

      (E)  No construction contract, agreement, or understanding   107          

that makes payment from a contractor to a subcontractor or         108          

materials supplier, or from a subcontractor to a materials         109          

supplier, lower tier subcontractor, or lower tier materials        110          

supplier contingent or conditioned upon receipt of payment from    111          

any other person shall prohibit a person from filing a claim to                 

protect rights under sections 153.56, 1311.06, and 1311.26 of the  113          

Revised Code from expiring during the pendency of receipt of       116          

payment.                                                                        

      (E)(F)  Nothing in this section shall be construed to        118          

create a liability for a surety on a bond that is greater than     120          

that of its principal, or limit the availability to a surety of    121          

any defenses available to its principal.                                        

      (F)(G)  As used in this section:                             124          

      (1)  "Contractor" and "lower tier subcontractor" have the    127          

same meanings as in section 4113.61 of the Revised Code.           130          

      (2)  "Materials supplier" includes any person by whom any    132          

                                                          4      


                                                                 
materials are furnished in furtherance of an improvement.          133          

      (3)  "Lower tier materials supplier" means a materials       135          

supplier who is not in privity of contract with a contractor but   136          

is in privity of contract with another subcontractor or a          137          

materials supplier.                                                             

      (4)  "Subcontractor," "improvement," and "materials" have    139          

the same meanings as in section 1311.01 of the Revised Code.       140          

      (5)  "CONSTRUCTION CONTRACT" MEANS A CONTRACT OR AGREEMENT   142          

FOR THE DESIGN, PLANNING, CONSTRUCTION, ALTERATION, REPAIR,        143          

MAINTENANCE, MOVING, DEMOLITION, OR EXCAVATION OF A BUILDING,      144          

STRUCTURE, HIGHWAY, ROAD, APPURTENANCE, OR APPLIANCE SITUATED ON   145          

REAL ESTATE LOCATED IN THIS STATE.                                 146          

      Section 2.  That existing section 4113.62 of the Revised     148          

Code is hereby repealed.                                           149