BILL ANALYSIS C.S.S.B. 662 By: Harris Jurisprudence 4-19-95 Committee Report (Substituted) BACKGROUND Construction contract clauses prevent subcontractors from having entitlement to payment for properly performed work by not obligating the general contractor to make payment to the subcontractor. Typically, this is accomplished through the payment clause whereby the general contractor makes its obligation to pay the subcontractor contingent upon events occurring other than the subcontractor properly performing the work. PURPOSE As proposed, C.S.S.B. 662 provides that certain agreements for the payment of subcontractors are against public policy and are void. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 35D, Business and Commerce Code, by adding Section 35.521, as follows: Sec. 35.521. AGREEMENT FOR PAYMENT OF CONSTRUCTION SUBCONTRACTOR. (a) Provides that a provision of a contract or other agreement, by which payment from an original contractor to a subcontractor is conditioned on receipt of payment from another person, is against public policy and is void. (b) Defines "original contractor," "owner," and "subcontractor." SECTION 2. Makes application of this Act prospective. SECTION 3. Effective date: September 1, 1995. SECTION 4. Emergency clause.