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History
- Substituted by A2369
- Advanced to third reading
- 2nd report cal.
- 1st report cal.353
- Referred to judiciary
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Prohibits any agreement relating to the construction, alteration, repair or maintenance of a building requiring subcontractors and materialmen to exhaust remedies
Signed by Governor · Sponsor Michael Cusick
Full text
The text isn't available here yet. Check nysenate.gov.
Sponsor's memo
Title of bill
An act to amend the general obligations law, in relation to a subcontractor's or materialman's right to file a claim and/or commence an action upon a payment bond
Purpose or general idea of bill
To forbid agreements in construction contracts to condition subcontractor's and materialman's rights to file a claim and/or commence an action on a payment bond on exhaustion of another legal remedy.
Summary of specific provisions
Section 5-322.1 of the General Obligations Law is amended to declare void and unenforceable a construction contract provision conditioning a subcontractor's and materialman's right to file claim and/or commence an action on payment bond on exhaustion of another legal remedy.
Justification
Since the New York State Court of Appeals West-Fair case which placed the risk of non payment by the owner on the contractor, contractors and their attorneys have been attempting to circumvent that decision and place the risk for non payment on the subcontractor. This "conditional provision" in effect denies the subcontractor and materialman its right to timely file and commence an action on the payment bond. Waiting until such time, as the subcontractor or materialman has exhausted its lien remedies or other legal remedies, will in all likelihood cause the one year statute of limitations for commencing an action on the bond to expire, thus resulting in shifting the risk of non payment from the bonding company and the contractor to the subcontractor and materialman. The intent of such a conditional provision is to interfere with the subcontractor and materialman's 3rd party beneficiary rights under the payment bond. Clearly such a provision is against public policy and should be declared void and unenforceable.
Prior legislative history
2008: A.9638 Passed Assembly
Fiscal implications
None.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.