| TO: | Honorable Helen Giddings, Chair, House Committee on Business & Industry |
| FROM: | John Keel, Director, Legislative Budget Board |
| IN RE: | HB541 by Chisum (Relating to contingent payment clauses in certain construction contracts.), As Introduced |
The bill adds Section 35.521 entitled "Agreement for Payment of Construction Subcontractor" to the Business & Commerce Code relating to contingent payment clauses in construction contracts. The bill sets forth definitions for contingent payment clause, contingent payor, contingent payee, and improvement, and specifies the conditions when a contingent payor or its surety may enforce the contingent payment clause of a contract and the circumstances when an unpaid indebtedness accrues. The bill states that the assertion of a contingent payment clause is an affirmative defense to a civil action for payment under the contract as long as the party asserting the defense can prove that the clause is enforceable, the provisions when the clause may not be waived by contract or other means, and applies only to contingent payment clause under which payment is contingent on the receipt of payment under a contract or other agreement entered into on or after September 1, 2003. The Act takes effect September 1, 2003.
| Source Agencies: | 302 Office of the Attorney General, 303 Building and Procurement Commission, 601 Department of Transportation
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| LBB Staff: | JK, JRO, MS, BL
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