Minnesota Legislature
SF 388
as introduced - 88th Legislature (2013 - 2014) Posted on 02/12/2013 08:45am
Current Version - as introduced
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A bill for an act
relating to commerce; regulating building and construction contracts and
indemnification agreements; amending Minnesota Statutes 2012, sections
337.01; 337.02; 337.05, subdivision 1; 337.10.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2012, section 337.01, is amended to read:
337.01 BUILDING AND CONSTRUCTION CONTRACTS;
INDEMNIFICATION AGREEMENTS.
Subdivision 1.
Definition.
As used in sections 337.01 to 337.05 new text begin and 337.10, new text end the
following terms have the meanings assigned to them.
Subd. 2.
Building and construction contract.
"Building and construction
contract" means a contract for the deleted text begin design,deleted text end construction, alteration, improvement, repair
or maintenance of real property, highways, roads or bridges. The term does not include
contracts for the maintenance or repair of machinery, equipment or other such devices
used as part of a manufacturing, converting or other production process, including
electric, gas, steam, and telephone utility equipment used for production, transmission,
or distribution purposes.
Subd. 3.
Indemnification agreement.
"Indemnification agreement" means an
agreement by the promisor to indemnify deleted text begin ordeleted text end new text begin ,new text end hold harmlessnew text begin , or defendnew text end the promisee against
liability or claims of liability for damages arising out of bodily injury to persons or out of
physical damage to tangible or real propertynew text begin or for economic lossnew text end .
new text begin Subd. 3a. new text end
new text begin Professional services contract. new text end
new text begin
"Professional services contract" means a
contract for services that are provided by a person licensed under sections 326.02 to 326.15.
new text end
Subd. 4.
Promisee.
"Promisee" includes that party's independent contractors,
agents, employees or indemnitees.
Sec. 2.
Minnesota Statutes 2012, section 337.02, is amended to read:
337.02 UNENFORCEABILITY OF CERTAIN AGREEMENTS.
An indemnification agreement contained in, or executed in connection with, new text begin a
professional services contract or new text end a building and construction contract is unenforceable
except to the extent that: (1) the underlying injury or damage is attributable to the
negligent or otherwise wrongful act or omission, including breach of a specific contractual
duty, of the promisor or the promisor's independent contractors, agents, employees,
or delegatees; or (2) an owner, a responsible party, or a governmental entity agrees to
indemnify a contractor directly or through another contractor with respect to strict liability
under environmental laws.
Sec. 3.
Minnesota Statutes 2012, section 337.05, subdivision 1, is amended to read:
Subdivision 1.
Agreements valid.
Sections 337.01 to 337.05 do not affect the
validity of deleted text begin agreementsdeleted text end new text begin building and construction contracts and professional services
contracts new text end whereby a promisor agrees to provide specific insurance coverage for the benefit
of othersnew text begin , except that a promise to provide professional liability insurance for the benefit
of others shall not be enforceablenew text end .
Sec. 4.
Minnesota Statutes 2012, section 337.10, is amended to read:
337.10 BUILDING AND CONSTRUCTION CONTRACTS; PROHIBITED
PROVISIONS.
Subdivision 1.
Application of laws of another state.
Provisions contained in,
or executed in connection with, a building and construction contract new text begin or a professional
services contract new text end to be performed in Minnesota making the contract subject to the laws of
another state or requiring that any litigation, arbitration, or other dispute resolution process
on the contract occur in another state are void and unenforceable.
Subd. 2.
Waiver of lien or claim.
Provisions contained in, or executed in connection
with, a building and construction contract new text begin or a professional services contract new text end requiring a
contractor, subcontractor, or material supplier to waive the right to a mechanics lien or to a
claim against a payment bond before the person has been paid for the labor or materials or
both that the person furnished are void and unenforceable. This provision shall not affect
the validity of a waiver as to any third party who detrimentally relies upon the waiver.
Subd. 3.
Prompt payment to subcontractors.
A building and construction contract
new text begin or a professional services contract new text end shall be deemed to require the prime contractor and all
subcontractors to promptly pay any subcontractor or material supplier contract within ten
days of receipt by the party responsible for payment of payment for undisputed services
provided by the party requesting payment. The contract shall be deemed to require the
party responsible for payment to pay interest of 1-1/2 percent per month to the party
requesting payment on any undisputed amount not paid on time. The minimum monthly
interest penalty payment for an unpaid balance of $100 or more is $10. For an unpaid
balance of less than $100, the party responsible for payment shall pay the actual penalty
due to the party requesting payment. A party requesting payment who prevails in a civil
action to collect interest penalties from a party responsible for payment must be awarded
its costs and disbursements, including attorney fees incurred in bringing the action.
Subd. 4.
Progress payments and retainages.
(a) Unless the building and
construction contract provides otherwise, the owner or other persons making payments
under the contract must make progress payments monthly as the work progresses.
Payments shall be based upon estimates of work completed as approved by the owner or
the owner's agent. A progress payment shall not be considered acceptance or approval of
any work or waiver of any defects therein.
(b) Unless the building and construction contract provides otherwise, an owner or
owner's agent may reserve as retainage from any progress payment on a building and
construction contract an amount not to exceed five percent of the payment. An owner or
owner's agent may reduce the amount of retainage and may eliminate retainage on any
monthly contract payment if, in the owner's opinion, the work is progressing satisfactorily.
(c) This subdivision does not apply to contracts for professional services as defined
in sections 326.02 to 326.15.
Subd. 5.
Definition.
For the purpose of this section, "building and construction
contract" deleted text begin hasdeleted text end new text begin and "professional services contract" havenew text end the deleted text begin meaningdeleted text end new text begin meaningsnew text end given deleted text begin the
termdeleted text end in section 337.01.
Sec. 5. new text begin EFFECTIVE DATE; APPLICATION.
new text end
new text begin
Sections 1 to 4 are effective August 1, 2013, and apply to contracts and agreements
entered into on or after that date.
new text end