Relates to the unenforceability of a contract clause requiring a contractor or subcontractor to continue unapproved or disputed work.
Ayes (56): Addabbo, Avella, Ball, Bonacic, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Duane, Farley, Flanagan, Fuschillo, Gallivan, Gianaris, Golden, Griffo, Grisanti, Hannon, Hassell-Thomps, Johnson, Kennedy, Klein, Krueger, Lanza, Larkin, LaValle, Libous, Little, Marcellino, Martins, Maziarz, McDonald, Montgomery, Nozzolio, Oppenheimer, Parker, Peralta, Ranzenhofer, Ritchie, Rivera, Robach, Saland, Sampson, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Storobin, Valesky, Young, Zeldin
Excused (6): Adams, Alesi, Espaillat, Huntley, O'Mara, Perkins
TITLE OF BILL: An act to amend the general obligations law, in relation to the unenforceability of a contract clause requiring a contractor or subcontractor to continue unapproved or disputed work
PURPOSE OR GENERAL IDEA OF BILL: To forbid agreements in construction contracts which require contractors or subcontractors to commence or continue unapproved or disputed work.
SUMMARY OF SPECIFIC PROVISIONS: Section 5-322.1 of the General Obligations Law is amended to declare void and unenforceable construction contract provisions which require contractors or subcontractors to commence or continue unapproved or disputed work.
JUSTIFICATION: Contract clauses which require subcontractors to commence or continue work on a project notwithstanding that the work is in dispute or not yet approved by the owner puts the subcontractor at risk of not being paid for the work he or she completes. These clauses are found in many construction contracts and are the cause of unnecessary and costly litigation and arbitration. This bill endeavors to cure this problem by making such clauses void and unenforceable. Contractors and subcontractors who refuse to commence or continue , unapproved or disputed work will no longer be liable for delay damages due to their refusal. The bill will also provide an incentive for owners to settle disputes and process change orders.
PRIOR LEGISLATIVE HISTORY: New bill.
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: This act shall take effect immediately and shall apply to all contracts executed on and after the effective date.
STATE OF NEW YORK ________________________________________________________________________ S. 6057 A. 8841 S E N A T E - A S S E M B L Y (PREFILED) January 4, 2012 ___________IN SENATE -- Introduced by Sen. DeFRANCISCO -- read twice and ordered printed, and when printed to be committed to the Committee on Judici- ary IN ASSEMBLY -- Introduced by M. of A. CUSICK, P. RIVERA, RUSSELL, STEV- ENSON, CASTRO -- Multi-Sponsored by -- M. of A. SCHIMEL -- read once and referred to the Committee on Judiciary AN ACT to amend the general obligations law, in relation to the unen- forceability of a contract clause requiring a contractor or subcon- tractor to continue unapproved or disputed work THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 2 of section 5-322.1 of the general obligations law, as added by chapter 224 of the laws of 2009, is amended to read as follows: 2. A covenant, promise, agreement or understanding in, or in connection with or collateral to a contract or agreement relative to the construction, alteration, repair or maintenance of a building, struc- ture, appurtenances and appliances including moving, demolition and excavating connected therewith, (A) purporting to condition a subcon- tractor's or materialman's right to file a claim and/or commence an action on a payment bond on exhaustion of another legal remedy OR (B) WHICH REQUIRES A CONTRACTOR OR SUBCONTRACTOR TO COMMENCE OR CONTINUE WORK NOTWITHSTANDING THAT THE WORK AND/OR THE PRICE FOR THE WORK IS IN DISPUTE OR HAS NOT BEEN APPROVED BY THE OWNER is against public policy and is void and unenforceable; provided that this subdivision shall not affect the validity of any insurance contract, workers' compensation agreement or other agreement issued by an admitted insurer. S 2. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD13599-01-1