SRC-SEW H.B. 2311 77(R)   BILL ANALYSIS


Senate Research Center   H.B. 2311
77R7518 ATP-FBy: Bosse (Harris)
State Affairs
5/1/2001
Engrossed


DIGEST AND PURPOSE 

On a typical construction project, the property owner contracts with a
general contractor who, in turn, contracts with subcontractors to perform
electrical, plumbing, or other work. Most contracts between general
contractors and subcontractors contain contingent payment clauses that make
payment from the general contractor to the subcontractor contingent upon
the general contractor being paid by the owner. By agreeing to a contingent
payment clause, the subcontractor waives any contractual right to sue the
general contractor for nonpayment. As a result, subcontractors may not
receive compensation for the work they perform. H.B. 2311 provides that a
contract between a general contractor and a subcontractor that contains a
contingent payment clause is void.  

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  SHORT TITLE.  Provides that this Act may be cited as the
Subcontractor's Right to be Paid Act. 
 
SECTION 2.  LEGISLATIVE FINDINGS.  Provides legislative findings.

SECTION 3.  Amends Chapter 35D, Business & Commerce Code, by adding Section
35.521, as follows: 
 
Sec. 35.521.  AGREEMENT FOR PAYMENT OF CONSTRUCTION SUBCONTRACTOR. Defines
"improvement," "original contractor," "owner," and "subcontractor."
Provides that a provision in a contract or other agreement that provides
that the payment of a subcontractor for work performed or materials
furnished is conditioned on the receipt of payment by the original
contractor or another subcontractor from another person, including the
owner for whom the improvement is being made, is void.  Prohibits a person
from waiving this section by contract or other means.  Provides that a
purported waiver of this section is void. 

SECTION 4.  Effective date:  September 1, 2001.  Makes application of this
Act prospective regarding a contract or agreement entered into on or after
the effective date of this Act.