HOUSE BILL NO. 1915 103RD GENERAL ASSEMBLY
INTRODUCED BY REPRESENTATIVE CASTEEL.
5457H.01I JOSEPH ENGLER, Chief Clerk
AN ACT To amend chapter 436, RSMo, by adding thereto one new section relating to construction contracts.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Chapter 436, RSMo, is amended by adding thereto one new section, to be 2 known as section 436.302, to read as follows: 436.302. 1. As used in this section, the following terms mean: 2 (1) "Construction contract", a written or oral agreement: 3 (a) Between an owner and a contractor or a supplier; 4 (b) Between a contractor and a subcontractor or a supplier; 5 (c) Between a subcontractor and a sub-subcontractor or a supplier; or 6 (d) Between a sub-subcontractor and a sub-sub-subcontractor or a supplier at 7 whatever tier 8 9 for construction, reconstruction, renovation, remodeling, alteration, maintenance, 10 repair, moving, design, excavation, or demolition; and that is intended to be used for 11 nongovernmental purposes; of any Missouri real property, buildings, structures, 12 improvements, private roads, highways, streets, bridges, viaducts, shafts, wells, water or 13 sewer systems, gas or other distribution systems, pipelines, appurtenances, or 14 appliances, including any demolition, moving, or excavation connected therewith; and 15 shall include the furnishing of surveying, design, engineering, development, supervision, 16 testing, observation, planning, or management services; or any labor, materials,
EXPLANATION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is intended to be omitted from the law. Matter in bold-face type in the above bill is proposed language. HB 1915 2
17 supplies, tools, equipment, and services performed, provided, furnished, supplied, or 18 rendered in connection with such work; 19 (2) "Owner", any person, firm, partnership, corporation, limited liability 20 company, joint venture, association, entity, or other organization, or a combination of 21 any such entities, that has a construction contract with a contractor, whether the interest 22 or estate of the person is in fee, as vendee under a contract to purchase, as lessee, or 23 another interest or estate less than fee; 24 (3) "Pay application", a collection of documents that contractors submit to 25 request payment for work on a construction project; 26 (4) "Subcontractor", any person, firm, partnership, corporation, limited 27 liability company, joint venture, association, entity, or other organization, or a 28 combination of any such entities at any tier, that has a contract with a contractor or 29 another subcontractor at any tier to perform, provide, furnish, supply, or render a 30 portion of the work under a construction contract; 31 (5) "Work", the labor, materials, supplies, tools, equipment, and services, 32 including design services, to be performed, provided, furnished, supplied, or rendered 33 by a contractor or subcontractor under a construction contract. 34 2. The rights and duties prescribed and recognized under this section shall not 35 be waivable or diminished under the terms of a contract or other agreement. The terms 36 of any contract or agreement purporting to waive or diminish the rights and duties 37 prescribed or recognized under this section shall be null and void and wholly 38 unenforceable and in violation of the public policy of this state. 39 3. The following construction contracts are against this state's public policy and 40 are null and void and wholly unenforceable: 41 (1) An agreement, provision, covenant, clause, or understanding in, collateral to, 42 implied in, or affecting a construction contract stating that a party to the construction 43 contract may withhold payment to another party to the construction contract for either 44 an amount in excess of the amount in dispute or for claims one party has against 45 another party relating to or arising out of another contract, agreement, or incident 46 between those parties; 47 (2) An agreement, provision, covenant, clause, or understanding in, collateral to, 48 implied in, or affecting a construction contract stating that a party to the construction 49 contract cannot suspend performance under the construction contract or terminate the 50 construction contract if another party to the construction contract fails to make prompt 51 payments pursuant to the terms of the construction contract; 52 (3) An agreement, provision, covenant, clause, or understanding in, collateral to, 53 implied in, or affecting a construction contract requiring a party to the construction HB 1915 3
54 contract to continue work or to continue to supply, furnish, or provide materials, labor, 55 or services if that party is not paid pursuant to terms of the construction contract; 56 (4) An agreement, provision, covenant, clause, or understanding in, collateral to, 57 implied in, or affecting a construction contract requiring one party to a construction 58 contract to perform, provide, or furnish extra or additional construction work not 59 included in the original scope of work of that person's construction contract without an 60 agreement made and entered into prior to performing, providing, or furnishing such 61 extra or additional work as to the amount to be paid or the methodology for 62 determining the amount to be paid for such extra or additional construction work; 63 (5) An agreement, provision, covenant, clause, or understanding in, collateral to, 64 implied in, or affecting a construction contract requiring one party to a construction 65 contract to waive or release any rights it has under the construction contract or rights it 66 has by operation of law to recover any amount in dispute as a condition for receiving 67 payment of an amount not in dispute; 68 (6) An agreement, provision, covenant, clause, or understanding in, collateral to, 69 implied in, or affecting a construction contract permitting, allowing, or authorizing one 70 party to take any of the following adverse actions: 71 (a) Terminate or suspend the construction contract; 72 (b) Withhold, deduct, back charge, set off, or redirect payments otherwise due to 73 another party to the construction contract; 74 (c) Take possession of equipment, materials, appliances, property, or tools of 75 another party to the construction contract; 76 (d) Take over and finish the work of another party to the construction contract; 77 or 78 (e) Take any other action detrimental to another party to the construction 79 contract for any reason without first giving written notice of the adverse action to the 80 party against whom the adverse action will be taken and stating with particularity what 81 actions need to be taken to cure the breach, defect, or deficiency serving as the basis for 82 taking the adverse action and giving a reasonable opportunity to cure the same; 83 (7) An agreement, provision, covenant, clause, or understanding in, collateral to, 84 implied in, or affecting a construction contract making the construction contract subject 85 to the laws of another state or that requires any litigation, arbitration, or other dispute 86 resolution proceeding arising from the construction contract to be conducted in another 87 state; and 88 (8) An agreement, provision, covenant, clause, or understanding in, collateral to, 89 implied in, or affecting a construction contract stating the payment by the owner to the 90 contractor, or the payment by the contractor to a subcontractor or supplier, or the HB 1915 4
91 payment by a subcontractor to a sub-subcontractor or supplier at any tier, is a condition 92 precedent for payment to either the subcontractor, sub-subcontractor, or supplier at 93 whatever tier who has performed in accordance with the terms of its construction 94 contract. 95 4. (1) In any construction contract between an owner and a contractor, the 96 parties shall include a provision that requires the owner to pay the contractor within 97 forty days after receipt of an invoice or pay application following satisfactory 98 completion of the portion of the work for which the contractor has sought payment. 99 Any construction contract that does not contain such a provision shall be deemed to 100 include such provision notwithstanding any language to the contrary contained in the 101 construction contract or other contract documents incorporated therein or otherwise 102 governing the construction contract. An owner shall not be required to pay amounts 103 invoiced, or be subject to a contractor's pay application, to the extent they are subject to 104 withholding under the contractor's construction contract with the owner due to the 105 contractor's material noncompliance with the terms of the construction contract. The 106 amount withheld shall not exceed the reasonable value of the work in material 107 noncompliance with the terms of the construction contract. 108 (2) In the event that an owner intends to withhold all or part of the amount 109 invoiced by or subject to the contractor's pay application, the owner shall give notice to 110 the contractor in writing of the owner's intention to withhold all or part of the 111 contractor's payment. Such notice shall be given within fifteen days after the owner 112 receives the contractor's invoice or pay application and shall provide: 113 (a) The amount the owner intends to withhold; 114 (b) The specific reasons why the owner intends to withhold payment, identifying 115 the work that is believed to be materially noncompliant; 116 (c) The name of the party and trade responsible for the noncompliant work with 117 sufficient information to allow the contractor to determine which, if any, subcontractor 118 or supplier may be responsible for the materially noncompliant work; and 119 (d) The extent or percentage of the amount withheld and apportioned between 120 all parties and trades, if more than one, believed to be ultimately responsible for the 121 materially noncompliant work. Any such notice that fails to reasonably apportion 122 responsibility between or among multiple parties and trades shall be deemed to be null 123 and void and ineffective. 124 125 Failure by the owner to give such notice within fifteen days after the owner receives the 126 contractor's invoice or pay application shall be deemed to be acceptance of the 127 contractor's pay application in full, subject only to the owner's right to claim later that HB 1915 5
128 materially noncompliant work was discovered and that such work was not reasonably 129 discoverable prior to the due date for giving said notice or information. 130 5. (1) In any construction contract between a contractor and a subcontractor, 131 the parties shall include a provision that requires the contractor to pay the 132 subcontractor within seven days after receipt of payment from the owner for the 133 subcontractor's work. Any construction contract that does not contain such a provision 134 shall be deemed to include such provision notwithstanding any language to the contrary 135 contained in the construction contract or other contract documents incorporated 136 therein or otherwise governing the construction contract. Within two business days 137 after receipt of payment from the owner for one or more subcontractors' work, the 138 contractor shall notify each subcontractor in writing or electronically of the amount of 139 payment received by the contractor for such subcontractor's work. The contractor 140 shall, within seven days of receipt of funds from the owner, remit to each subcontractor 141 the full share of the sum received by the contractor from the owner for the 142 subcontractor's work. Any funds received by the contractor from the owner for a 143 subcontractor's work that the owner does not intend to pay to the subcontractor shall 144 promptly be returned to the owner. 145 (2) In the event that an owner withholds all or part of the amount invoiced by, or 146 subject to, the contractor's pay application or gives notice of its intent to do so as 147 provided in subdivision (2) of subsection 4 of this section, the contractor shall, within 148 seven days after receipt of such information or notice, provide a copy of the notice or 149 information to each subcontractor affected thereby. The failure by the contractor to 150 give such notice or information to the subcontractor within seven days after receipt of 151 such notice or information from the owner shall be deemed to be an acceptance by the 152 contractor of the subcontractor's invoice or pay application, subject only to the 153 contractor's right to claim later that materially noncompliant work was discovered and 154 that such work was not reasonably discoverable prior to the due date for giving said 155 notice or information. 156 (3) Partial payment by the owner to the contractor shall not be a basis for the 157 contractor to withhold more from the subcontractor than the owner withheld from the 158 contractor for the subcontractor's work. The contractor shall not withhold from the 159 subcontractor any more than the owner identifies as the responsibility of the 160 subcontractor. 161 (4) A sub-subcontractor or supplier shall have the same rights and 162 responsibilities in relation to its subcontractor as the subcontractor has to its contractor. 163 (5) All rights and responsibilities shall flow down to all parties in the 164 construction contract chain no matter the tier. A lower-tier subcontractor and supplier, HB 1915 6
165 at whatever tier, shall have the same rights and responsibilities in relationship to the 166 party with whom it has a construction contract as that party has with the party with 167 whom it has a construction contract. A subcontractor to a contractor shall have the 168 same rights and responsibilities as to the contractor as the contractor has in its 169 relationship with the owner; a supplier to a subcontractor shall have the same rights 170 and responsibilities as to the subcontractor as the subcontractor has in its relationship 171 with the contractor; and a supplier to a contractor shall have the same rights and 172 responsibilities as to the contractor as the contractor has in its relationship with the 173 owner. 174 6. The provisions of this section shall not apply to the repair or remodeling of, or 175 the addition to, any owner-occupied residential property of four units or less that the 176 owner currently occupies, or intends to occupy, as a residence within a reasonable time 177 after the completion of the repair, remodeling, or addition that is the subject of the 178 construction contract. 179 7. The provisions of this section shall apply only to construction contracts or 180 agreements entered into after August 28, 2026. ✔
Statutes affected: