HBA-CCH H.B. 2311 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2311
By: Bosse
Business & Industry
3/13/2001
Introduced



BACKGROUND 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 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.  House Bill 2311 provides that a
contract between a general contractor and a subcontractor that contains a
contingent payment clause is void.    

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 2311 amends the Business & Commerce Code to establish the
Subcontractor's Right to be Paid Act.  The bill makes void any provision in
a contract or other agreement that provides payment to a subcontractor for
work performed or materials furnished for the improvement of real property,
that is conditioned on the receipt of payment by the general contractor or
another subcontractor from another person, including the owner for whom an
improvement is made.  The bill prohibits a person from waiving this
provision by contract or other means, and provides that a purported waiver
of this provision is void. 

EFFECTIVE DATE

September 1, 2001.