130th Ohio General Assembly
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As Passed by the Senate

122nd General Assembly
Regular Session
1997-1998
Am. Sub. S. B. No. 71

SENATOR CUPP


A BILL
To amend sections 153.56 and 2305.31 and to enact section 4113.62 of the Revised Code to void various types of provisions of a construction contract or subcontract that are considered to be against public policy and to establish new requirements and limitations relative to exercising rights under a bond for certain public improvements.

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


Section 1. That sections 153.56 and 2305.31 be amended and section 4113.62 of the Revised Code be enacted to read as follows:

Sec. 153.56. (A) Any person to whom any money is due for labor or work performed or materials furnished in a public improvement as provided in section 153.54 of the Revised Code, at any time after performing the labor or work or furnishing the materials, but not later than ninety days after the acceptance of the public improvement by the duly authorized board or officer, shall furnish the sureties on the bond, a statement of the amount due to the person.

(B) A suit shall not be brought against sureties on the bond until after sixty days after the furnishing of the statement described in DIVISION (A) OF this section. If the indebtedness is not paid in full at the expiration of that sixty days, AND IF THE PERSON COMPLIES WITH DIVISION (C) OF THIS SECTION, the person may bring an action in his THE PERSON'S own name upon the bond, as provided in sections 2307.06 and 2307.07 of the Revised Code, that action to be commenced, notwithstanding section 2305.12 of the Revised Code, not later than one year from the date of acceptance of the public improvement.

(C) TO EXERCISE RIGHTS UNDER THIS SECTION, A SUBCONTRACTOR OR MATERIALS SUPPLIER WHO IS NOT IN DIRECT PRIVITY OF CONTRACT WITH THE PRINCIPAL CONTRACTOR FOR THE PUBLIC IMPROVEMENT SHALL SERVE A NOTICE OF FURNISHING UPON THE PRINCIPAL CONTRACTOR IN THE FORM PROVIDED IN SECTION 1311.261 OF THE REVISED CODE.

(D) A SUBCONTRACTOR OR MATERIALS SUPPLIER WHO SERVES A NOTICE OF FURNISHING UNDER DIVISION (C) OF THIS SECTION AS REQUIRED TO EXERCISE RIGHTS UNDER THIS SECTION HAS THE RIGHT OF RECOVERY ONLY AS TO AMOUNTS OWED FOR LABOR AND WORK PERFORMED AND MATERIALS FURNISHED DURING AND AFTER THE TWENTY-ONE DAYS IMMEDIATELY PRECEDING SERVICE OF THE NOTICE OF FURNISHING.

(E) FOR PURPOSES OF THIS SECTION, "PRINCIPAL CONTRACTOR" HAS THE SAME MEANING AS IN SECTION 1311.25 OF THE REVISED CODE.

Sec. 2305.31. A covenant, promise, agreement, or understanding in, or in connection with or collateral to, a contract or agreement relative to the design, planning, construction, alteration, repair, or maintenance of a building, structure, highway, road, appurtenance, and appliance, including moving, demolition, and excavating connected therewith, pursuant to which contract or agreement the promisee, or its independent contractors, agents, or employees has hired the promisor to perform work, purporting to indemnify the promisee, its independent contractors, agents, employees, or indemnitees against liability for damages arising out of bodily injury to persons or damage to property initiated or proximately caused by or resulting from the negligence of the promisee, its independent contractors, agents, employees, or indemnitees is against public policy and is void. Nothing

NOTHING in this section shall prohibit any person from purchasing insurance from an insurance company authorized to do business in the state of Ohio for his THE PERSON'S own protection or from purchasing a construction bond.

Sec. 4113.62. (A) ANY PROVISION OF A CONSTRUCTION CONTRACT, AGREEMENT, OR UNDERSTANDING THAT WAIVES RIGHTS UNDER A SURETY BOND IS VOID AND UNENFORCEABLE AS AGAINST PUBLIC POLICY.

(B) ANY PROVISION OF A CONSTRUCTION CONTRACT, AGREEMENT, OR UNDERSTANDING, OR SPECIFICATION OR OTHER DOCUMENTATION THAT IS MADE A PART OF A CONSTRUCTION CONTRACT, AGREEMENT, OR UNDERSTANDING, THAT WAIVES ANY PENDING OR ASSERTED CLAIM ON THE BASIS OF FINAL PAYMENT MADE FROM ONE PERSON TO ANOTHER FOR THE CONSTRUCTION CONTRACT, AGREEMENT, OR UNDERSTANDING, IS VOID AND UNENFORCEABLE AS AGAINST PUBLIC POLICY, WHEN THE PERSON AGAINST WHOM THE CLAIM IS PENDING OR ASSERTED HAS RECEIVED NOTICE OF THAT PENDING OR ASSERTED CLAIM.

(C)(1) ANY PROVISION OF A CONSTRUCTION CONTRACT, AGREEMENT, OR UNDERSTANDING, OR SPECIFICATION OR OTHER DOCUMENTATION THAT IS MADE A PART OF A CONSTRUCTION CONTRACT, AGREEMENT, OR UNDERSTANDING, THAT WAIVES OR PRECLUDES LIABILITY FOR DELAY DURING THE COURSE OF A CONSTRUCTION CONTRACT WHEN THE CAUSE OF THE DELAY IS A PROXIMATE RESULT OF THE OWNER'S ACT OR FAILURE TO ACT, OR THAT WAIVES ANY OTHER REMEDY FOR A CONSTRUCTION CONTRACT WHEN THE CAUSE OF THE DELAY IS A PROXIMATE RESULT OF THE OWNER'S ACT OR FAILURE TO ACT, IS VOID AND UNENFORCEABLE AS AGAINST PUBLIC POLICY.

(2) ANY PROVISION OF A CONSTRUCTION SUBCONTRACT, AGREEMENT, OR UNDERSTANDING, OR SPECIFICATION OR OTHER DOCUMENTATION THAT IS MADE PART OF A CONSTRUCTION SUBCONTRACT, AGREEMENT, OR UNDERSTANDING, THAT WAIVES OR PRECLUDES LIABILITY FOR DELAY DURING THE COURSE OF A CONSTRUCTION SUBCONTRACT WHEN THE CAUSE OF THE DELAY IS A PROXIMATE RESULT OF THE OWNER'S OR CONTRACTOR'S ACT OR FAILURE TO ACT, OR THAT WAIVES ANY OTHER REMEDY FOR A CONSTRUCTION SUBCONTRACT WHEN THE CAUSE OF THE DELAY IS A PROXIMATE RESULT OF THE OWNER'S OR CONTRACTOR'S ACT OR FAILURE TO ACT, IS VOID AND UNENFORCEABLE AS AGAINST PUBLIC POLICY.

(D) NOTHING IN THIS SECTION SHALL BE CONSTRUED TO DO ANY OF THE FOLLOWING:

(1) PROHIBIT A CONSTRUCTION CONTRACT, AGREEMENT, OR UNDERSTANDING FROM PROVIDING THAT PAYMENT FROM A CONTRACTOR TO A SUBCONTRACTOR OR MATERIALS SUPPLIER, OR FROM A SUBCONTRACTOR TO A MATERIALS SUPPLIER, LOWER TIER SUBCONTRACTOR, OR LOWER TIER MATERIALS SUPPLIER, IS CONTINGENT OR CONDITIONED UPON RECEIPT OF PAYMENT FROM ANY OTHER PERSON;

(2) PROHIBIT A PERSON FROM FILING A CLAIM TO PROTECT RIGHTS UNDER SECTIONS 153.56, 1311.06, AND 1311.26 OF THE REVISED CODE FROM EXPIRING DURING THE PENDENCY OF RECEIPT OF PAYMENT THAT IS CONTINGENT OR CONDITIONED AS DESCRIBED IN DIVISION (D)(1) OF THIS SECTION;

(3) CREATE A LIABILITY FOR A SURETY ON A BOND THAT IS GREATER THAN THAT OF ITS PRINCIPAL, OR LIMIT THE AVAILABILITY TO A SURETY OF ANY DEFENSES AVAILABLE TO ITS PRINCIPAL.

(E) AS USED IN THIS SECTION:

(1) "CONTRACTOR" AND "LOWER TIER SUBCONTRACTOR" HAVE THE SAME MEANINGS AS IN SECTION 4113.61 OF THE REVISED CODE.

(2) "MATERIALS SUPPLIER" INCLUDES ANY PERSON BY WHOM ANY MATERIALS ARE FURNISHED IN FURTHERANCE OF AN IMPROVEMENT.

(3) "LOWER TIER MATERIALS SUPPLIER" MEANS A MATERIALS SUPPLIER WHO IS NOT IN PRIVITY OF CONTRACT WITH A CONTRACTOR BUT IS IN PRIVITY OF CONTRACT WITH ANOTHER SUBCONTRACTOR OR A MATERIALS SUPPLIER.

(4) "SUBCONTRACTOR," "IMPROVEMENT," AND "MATERIALS" HAVE THE SAME MEANINGS AS IN SECTION 1311.01 of the Revised Code.


Section 2. That existing sections 153.56 and 2305.31 of the Revised Code are hereby repealed.
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