2007 Minnesota Statutes

CHAPTER 337. BUILDING AND CONSTRUCTION CONTRACTS

337.01 BUILDING AND CONSTRUCTION CONTRACTS; INDEMNIFICATION
AGREEMENTS.
    Subdivision 1. Definition. As used in sections 337.01 to 337.05 the following terms have the
meanings assigned to them.
    Subd. 2. Building and construction contract. "Building and construction contract" means
a contract for the design, 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 or hold harmless 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
property.
    Subd. 4. Promisee. "Promisee" includes that party's independent contractors, agents,
employees or indemnitees.
History: 1983 c 333 s 1; 1984 c 598 s 1-3

337.02 UNENFORCEABILITY OF CERTAIN AGREEMENTS.
An indemnification agreement contained in, or executed in connection with, 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.
History: 1983 c 333 s 2; 1984 c 598 s 4; 1999 c 87 s 1

337.03 NONAPPLICATION TO CERTAIN AGREEMENTS.
Sections 337.01 to 337.05 do not apply to an agreement by which a promisor that is a party to
a building and construction contract indemnifies a person, firm, corporation, or public agency for
whose account the construction is not being performed, but who, as an accommodation, permits
the promisor or the promisor's independent contractors, agents, employees, or delegatees to enter
upon or adjacent to its property for the purpose of performing the building and construction
contract. Sections 337.01 to 337.05 do not apply to an indemnification agreement that is an
integral part of an offer to compromise or settlement of a disputed claim, if:
(a) the settlement is based on consideration;
(b) the dispute relates to an alleged event that is related to a construction contract and that
occurred before the settlement is made; and
(c) the indemnification relates only to claims that have arisen or may arise from the past event.
History: 1983 c 333 s 3; 1984 c 598 s 5

337.04 VALIDITY OF OTHER AGREEMENTS.
Sections 337.01 to 337.05 do not affect the validity of any insurance contract, workers'
compensation agreement, construction bond, or other agreement lawfully issued by an insurer
or bonding company.
History: 1983 c 333 s 4

337.05 AGREEMENTS TO INSURE.
    Subdivision 1. Agreements valid. Sections 337.01 to 337.05 do not affect the validity of
agreements whereby a promisor agrees to provide specific insurance coverage for the benefit
of others.
    Subd. 2. Indemnification for breach of agreement. If:
(a) a promisor agrees to provide specific types and limits of insurance; and
(b) a claim arises within the scope of the specified insurance; and
(c) the promisor did not obtain and keep in force the specified insurance;
then, as to that claim and regardless of section 337.02, the promisee shall have
indemnification from the promisor to the same extent as the specified insurance.
    Subd. 3. When indemnification not available. The indemnification stated in subdivision
2 is not available if:
(a) the specified insurance was not reasonably available in the market; and
(b) the promisor so informed the other party to the agreement to insure before signing the
agreement, or signed the agreement subject to a written exception as to the nonavailable insurance.
    Subd. 4. Indemnification regarding deductible amounts. If:
(1) a promisor agrees to provide specific types and limits of insurance; and
(2) a claim arises within the scope of the specified insurance; and
(3) the insurance provided by the promisor includes a self-insured retention or a deductible
amount;
then, as to that claim and regardless of section 337.02, the promisee shall have
indemnification from the promisor to the full extent of the deductible amount or self-insured
retention.
    Subd. 5. No waiver by certificates. A promisor's obligation to provide specified insurance is
not waived by either or both of the following:
(1) a promisee's failure to require or insist upon certificates or other evidence of insurance;
(2) a promisee's acceptance of a certificate or other evidence of insurance that shows a
variance from the specified coverage.
History: 1983 c 333 s 5; 1984 c 598 s 6-8

337.06 COMMON LAW RIGHTS.
Subject to section 337.02, sections 337.01 to 337.06 do not in any way restrict rights to
indemnification that the common law may provide.
History: 1984 c 598 s 9

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 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 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 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. This subdivision does not apply to
construction of or improvements to residential real estate as defined in section 326.83, subdivision
17 , or to construction of or improvements to attached single-family dwellings, if those dwellings
are used for residential purposes and have fewer than 13 units per structure.
    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.
(d) This subdivision does not apply to construction of or improvements to residential real
estate, as defined in section 326.83, subdivision 17, or to construction of or improvements to
attached single-family dwellings, if those dwellings are used for residential purposes and have
fewer than 13 units per structure.
    Subd. 5. Definition. For the purpose of this section, "building and construction contract" has
the meaning given the term in section 337.01.
History: 1997 c 127 s 1; 1998 c 289 s 1,2; 1999 c 116 s 2