Bill Text: MN SF387 | 2011-2012 | 87th Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Building and construction contracts, professional services contracts, and indemnification agreements regulations
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2011-04-14 - Comm report: To pass as amended and re-refer to Judiciary and Public Safety [SF387 Detail]
Download: Minnesota-2011-SF387-Introduced.html
Bill Title: Building and construction contracts, professional services contracts, and indemnification agreements regulations
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2011-04-14 - Comm report: To pass as amended and re-refer to Judiciary and Public Safety [SF387 Detail]
Download: Minnesota-2011-SF387-Introduced.html
1.2relating to commerce; regulating building and construction contracts and
1.3indemnification agreements;amending Minnesota Statutes 2010, sections
1.4337.01; 337.02; 337.05, subdivision 1; 337.10.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 337.01, is amended to read:
1.7337.01 BUILDING AND CONSTRUCTION CONTRACTS;
1.8INDEMNIFICATION AGREEMENTS.
1.9 Subdivision 1. Definition. As used in sections337.01 to
337.05 and 337.10, the
1.10following terms have the meanings assigned to them.
1.11 Subd. 2. Building and construction contract. "Building and construction
1.12contract" means a contract for thedesign, construction, alteration, improvement, repair
1.13or maintenance of real property, highways, roads or bridges. The term does not include
1.14contracts for the maintenance or repair of machinery, equipment or other such devices
1.15used as part of a manufacturing, converting or other production process, including
1.16electric, gas, steam, and telephone utility equipment used for production, transmission,
1.17or distribution purposes.
1.18 Subd. 3. Indemnification agreement. "Indemnification agreement" means an
1.19agreement by the promisor to indemnifyor, hold harmless, or defend the promisee against
1.20liability or claims of liability for damages arising out of bodily injury to persons or out of
1.21physical damage to tangible or real property or for economic loss.
1.22 Subd. 3a. Professional services contract. "Professional services contract" means
1.23a contract for services that are provided by a person licensed under sections 326.02
1.24to 326.15.
2.1 Subd. 4. Promisee. "Promisee" includes that party's independent contractors,
2.2agents, employees or indemnitees.
2.3 Sec. 2. Minnesota Statutes 2010, section 337.02, is amended to read:
2.4337.02 UNENFORCEABILITY OF CERTAIN AGREEMENTS.
2.5An indemnification agreement contained in, or executed in connection with, a
2.6professional services contract or a building and construction contract is unenforceable
2.7except to the extent that: (1) the underlying injury or damage is attributable to the
2.8negligent or otherwise wrongful act or omission, including breach of a specific contractual
2.9duty, of the promisor or the promisor's independent contractors, agents, employees,
2.10or delegatees; or (2) an owner, a responsible party, or a governmental entity agrees to
2.11indemnify a contractor directly or through another contractor with respect to strict liability
2.12under environmental laws.
2.13 Sec. 3. Minnesota Statutes 2010, section 337.05, subdivision 1, is amended to read:
2.14 Subdivision 1. Agreements valid. Sections337.01 to
337.05 do not affect the
2.15validity ofagreements building and construction contracts whereby a promisor agrees to
2.16provide specific insurance coverage for the benefit of others.
2.17 Sec. 4. Minnesota Statutes 2010, section 337.10, is amended to read:
2.18337.10 BUILDING AND CONSTRUCTION CONTRACTS; PROHIBITED
2.19PROVISIONS.
2.20 Subdivision 1. Application of laws of another state. Provisions contained in,
2.21or executed in connection with, a building and construction contract or a professional
2.22services contract to be performed in Minnesota making the contract subject to the laws of
2.23another state or requiring that any litigation, arbitration, or other dispute resolution process
2.24on the contract occur in another state are void and unenforceable.
2.25 Subd. 2. Waiver of lien or claim. Provisions contained in, or executed in connection
2.26with, a building and construction contract or a professional services contract requiring a
2.27contractor, subcontractor, or material supplier to waive the right to a mechanics lien or to a
2.28claim against a payment bond before the person has been paid for the labor or materials or
2.29both that the person furnished are void and unenforceable. This provision shall not affect
2.30the validity of a waiver as to any third party who detrimentally relies upon the waiver.
2.31 Subd. 3. Prompt payment to subcontractors. A building and construction contract
2.32or a professional services contract shall be deemed to require the prime contractor and all
2.33subcontractors to promptly pay any subcontractor or material supplier contract within ten
3.1days of receipt by the party responsible for payment of payment for undisputed services
3.2provided by the party requesting payment. The contract shall be deemed to require the
3.3party responsible for payment to pay interest of 1-1/2 percent per month to the party
3.4requesting payment on any undisputed amount not paid on time. The minimum monthly
3.5interest penalty payment for an unpaid balance of $100 or more is $10. For an unpaid
3.6balance of less than $100, the party responsible for payment shall pay the actual penalty
3.7due to the party requesting payment. A party requesting payment who prevails in a civil
3.8action to collect interest penalties from a party responsible for payment must be awarded
3.9its costs and disbursements, including attorney fees incurred in bringing the action.
3.10 Subd. 4. Progress payments and retainages. (a) Unless the building and
3.11construction contract provides otherwise, the owner or other persons making payments
3.12under the contract must make progress payments monthly as the work progresses.
3.13Payments shall be based upon estimates of work completed as approved by the owner or
3.14the owner's agent. A progress payment shall not be considered acceptance or approval of
3.15any work or waiver of any defects therein.
3.16(b) Unless the building and construction contract provides otherwise, an owner or
3.17owner's agent may reserve as retainage from any progress payment on a building and
3.18construction contract an amount not to exceed five percent of the payment. An owner or
3.19owner's agent may reduce the amount of retainage and may eliminate retainage on any
3.20monthly contract payment if, in the owner's opinion, the work is progressing satisfactorily.
3.21(c) This subdivision does not apply to contracts for professional services as defined
3.22in sections326.02 to
326.15 .
3.23 Subd. 5. Definition. For the purpose of this section, "building and construction
3.24contract"has and "professional services contract" have the meaning meanings given the
3.25term in section
337.01 .
3.26 Sec. 5. EFFECTIVE DATE; APPLICATION.
3.27Sections 1 to 4 are effective August 1, 2011, and apply to contracts and agreements
3.28entered into on or after that date.
1.3indemnification agreements;amending Minnesota Statutes 2010, sections
1.4337.01; 337.02; 337.05, subdivision 1; 337.10.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 337.01, is amended to read:
1.7337.01 BUILDING AND CONSTRUCTION CONTRACTS;
1.8INDEMNIFICATION AGREEMENTS.
1.9 Subdivision 1. Definition. As used in sections
1.10following terms have the meanings assigned to them.
1.11 Subd. 2. Building and construction contract. "Building and construction
1.12contract" means a contract for the
1.13or maintenance of real property, highways, roads or bridges. The term does not include
1.14contracts for the maintenance or repair of machinery, equipment or other such devices
1.15used as part of a manufacturing, converting or other production process, including
1.16electric, gas, steam, and telephone utility equipment used for production, transmission,
1.17or distribution purposes.
1.18 Subd. 3. Indemnification agreement. "Indemnification agreement" means an
1.19agreement by the promisor to indemnify
1.20liability or claims of liability for damages arising out of bodily injury to persons or out of
1.21physical damage to tangible or real property or for economic loss.
1.22 Subd. 3a. Professional services contract. "Professional services contract" means
1.23a contract for services that are provided by a person licensed under sections 326.02
1.24to 326.15.
2.1 Subd. 4. Promisee. "Promisee" includes that party's independent contractors,
2.2agents, employees or indemnitees.
2.3 Sec. 2. Minnesota Statutes 2010, section 337.02, is amended to read:
2.4337.02 UNENFORCEABILITY OF CERTAIN AGREEMENTS.
2.5An indemnification agreement contained in, or executed in connection with, a
2.6professional services contract or a building and construction contract is unenforceable
2.7except to the extent that: (1) the underlying injury or damage is attributable to the
2.8negligent or otherwise wrongful act or omission, including breach of a specific contractual
2.9duty, of the promisor or the promisor's independent contractors, agents, employees,
2.10or delegatees; or (2) an owner, a responsible party, or a governmental entity agrees to
2.11indemnify a contractor directly or through another contractor with respect to strict liability
2.12under environmental laws.
2.13 Sec. 3. Minnesota Statutes 2010, section 337.05, subdivision 1, is amended to read:
2.14 Subdivision 1. Agreements valid. Sections
2.15validity of
2.16provide specific insurance coverage for the benefit of others.
2.17 Sec. 4. Minnesota Statutes 2010, section 337.10, is amended to read:
2.18337.10 BUILDING AND CONSTRUCTION CONTRACTS; PROHIBITED
2.19PROVISIONS.
2.20 Subdivision 1. Application of laws of another state. Provisions contained in,
2.21or executed in connection with, a building and construction contract or a professional
2.22services contract to be performed in Minnesota making the contract subject to the laws of
2.23another state or requiring that any litigation, arbitration, or other dispute resolution process
2.24on the contract occur in another state are void and unenforceable.
2.25 Subd. 2. Waiver of lien or claim. Provisions contained in, or executed in connection
2.26with, a building and construction contract or a professional services contract requiring a
2.27contractor, subcontractor, or material supplier to waive the right to a mechanics lien or to a
2.28claim against a payment bond before the person has been paid for the labor or materials or
2.29both that the person furnished are void and unenforceable. This provision shall not affect
2.30the validity of a waiver as to any third party who detrimentally relies upon the waiver.
2.31 Subd. 3. Prompt payment to subcontractors. A building and construction contract
2.32or a professional services contract shall be deemed to require the prime contractor and all
2.33subcontractors to promptly pay any subcontractor or material supplier contract within ten
3.1days of receipt by the party responsible for payment of payment for undisputed services
3.2provided by the party requesting payment. The contract shall be deemed to require the
3.3party responsible for payment to pay interest of 1-1/2 percent per month to the party
3.4requesting payment on any undisputed amount not paid on time. The minimum monthly
3.5interest penalty payment for an unpaid balance of $100 or more is $10. For an unpaid
3.6balance of less than $100, the party responsible for payment shall pay the actual penalty
3.7due to the party requesting payment. A party requesting payment who prevails in a civil
3.8action to collect interest penalties from a party responsible for payment must be awarded
3.9its costs and disbursements, including attorney fees incurred in bringing the action.
3.10 Subd. 4. Progress payments and retainages. (a) Unless the building and
3.11construction contract provides otherwise, the owner or other persons making payments
3.12under the contract must make progress payments monthly as the work progresses.
3.13Payments shall be based upon estimates of work completed as approved by the owner or
3.14the owner's agent. A progress payment shall not be considered acceptance or approval of
3.15any work or waiver of any defects therein.
3.16(b) Unless the building and construction contract provides otherwise, an owner or
3.17owner's agent may reserve as retainage from any progress payment on a building and
3.18construction contract an amount not to exceed five percent of the payment. An owner or
3.19owner's agent may reduce the amount of retainage and may eliminate retainage on any
3.20monthly contract payment if, in the owner's opinion, the work is progressing satisfactorily.
3.21(c) This subdivision does not apply to contracts for professional services as defined
3.22in sections
3.23 Subd. 5. Definition. For the purpose of this section, "building and construction
3.24contract"
3.25
3.26 Sec. 5. EFFECTIVE DATE; APPLICATION.
3.27Sections 1 to 4 are effective August 1, 2011, and apply to contracts and agreements
3.28entered into on or after that date.
