S.B. 73

1

CONTRACTOR'S DUTIES TO SUBCONTRACTORS
2 1997 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: L. Alma Mansell
5 AN ACT RELATING TO COMMERCE; ADDRESSING PAYMENT OBLIGATIONS UNDER
6 CONSTRUCTION CONTRACTS REGULATING CONTRACTS BETWEEN
7 CONTRACTORS AND SUBCONTRACTORS; AND PROVIDING SCOPE OF SECTION.
8 This act affects sections of Utah Code Annotated 1953 as follows:
9 ENACTS:
10 13-8-3, Utah Code Annotated 1953
11 Be it enacted by the Legislature of the state of Utah:
12 Section 1. Section 13-8-3 is enacted to read:
13 13-8-3. Obligation to pay under construction contracts -- Rights of parties under
14 contingent payment provisions.
15 (1) For purposes of this section:
16 (a) "Construction contract" means a contract or agreement to provide services, labor, or
17 materials for the design, construction, installation, or repair of an improvement to real property
18 located in Utah.
19 (b) "Contingent payment contract" means a construction contract between a contractor and
20 a subcontractor that makes a payment from the contractor to the subcontractor contingent on the
21 contractor receiving a S CORRESPONDING s payment from any other public or private party,
21a including a private owner.
22 (c) "Contractor" means a person who is or may be awarded a contract for the construction,
23 alteration, or repair of any building, structure, or improvement to real property.
24 (d) "Subcontractor" means any person engaged by a contractor to provide services, labor,
25 or materials for the design, construction, installation, or repair of an improvement to real property
26 and includes a trade contractor or specialty contractor.
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Amend on 2_goldenrod January 28, 1997 27 (2) A party to a construction contract shall make all scheduled payments under the terms

1 of the construction contract.
2 (3) (a) The existence of a contingent payment contract is not a defense to a claim to
3 enforce a mechanics' lien filed under Title 38, Chapter 1, Mechanics' Liens.
4 (b) Subsection (3) does not apply to contracts for private construction work for the
5 building, improvement, repair, or remodeling of residential property consisting of four units or
6 less.
7 (4) If a construction contract is a contingent payment contract:
8 (a) the subcontractor may request from the contractor the financial information that the
9 contractor S HAS s received from the public or private party regarding:
10 (i) the project financing; and
11 (ii) the public or private party; and
12 (b) if information is requested by the subcontractor under Subsection (4)(a), the contractor
13 shall provide the information prior to the subcontractor signing S [of ] s the construction contract
13a S BETWEEN THE CONTRACTOR AND THE SUBCONTRACTOR s .
14 (5) This section applies to a contract executed S [, renewed, or materially modified] s on or
14a after
15 May 5, 1997.




Legislative Review Note
as of 7-17-96 1:45 PM

A limited legal review of this bill raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

Committee Note

The Business, Labor, and Economic Development Interim Committee recommended this bill.

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Amend on 2_goldenrod January 28, 1997 - 2 -