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SECOND REGULAR SESSION
HOUSE BILL NO. 3166
103RD GENERAL ASSEMBL Y
INTRODUCED BY REPRESENT A TIVE EAL Y .
6652H.01I JOSEPH ENGLER, Chief Clerk
AN ACT
T o 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 agr eement:
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, r econstruction, r enovation, r emodeling, alteration, maintenance,
10 r epair , moving, design, excavation, or demolition; and that is intended to be used for
11 nongovernmental purposes; of any Missouri r eal pr operty , buildings, structures,
12 impr ovements, private roads, highways, street s, bridges, viaducts, shafts, wells, water or
13 sewer systems, gas or other distribution systems, pipelines, appurtenances, or
1 4 appliances, including any demolition, moving, or excavation connected ther ewith; and
15 shall include the furnishing of surveying, design, engineering, development, supervision,
16 testing, observation, planning, or management services; or any labor , materials,
EXPLANA TION — 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.
17 supplies, tools, equipment, and services performed, pr ovided, furnished, supplied, or
18 r ender ed in connection with such work;
19 (2) "Owner", any person, firm, partnership, corporation, limited liability
20 company , joint ventur e, association, entity , or other organization, or a combination of
21 any such entities, that has a construction contract with a contractor , whether the inter est
22 or estate of the person is in fee, as vendee under a contract to purc hase, as lessee, or
23 another inter est or estate less than fee;
24 (3) "Pay application", a collection of documents that contractors submit to
25 r equest payment for work on a construction pr oject;
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, pr ovide, furnish, supply , or r ender a
30 portion of the work under a construction contract;
31 (5) "W ork", the labor , materials, supplies, tools, equipment, and services,
32 including design services, to be performed, pr ovided, furnished, supplied, or render ed
33 by a contractor or subcontractor under a construction contract.
34 2. The rights and duties prescrib ed and r ecognized 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 agr eement purporting to waive or diminish the rights and duties
37 pr escribed or recog nized under this section shall be null and void and wholly
38 unenfor ceable 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 ar e null and void and wholly unenfor ceable:
41 (1) An agr eement, pro vision, 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 relat ing to or arising out of another contract, agr eement, or incident
46 between those parties;
47 (2) An agr eement, pro vision, 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 agr eement, pro vision, covenant, clause, or understanding in, collateral to,
53 implied in, or affecting a construction contract r equiring a party to the construction
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54 contract to continue work or to continue to supply , furnish, or pr ovide materials, labor ,
55 or services if that party is not paid pursuant to terms of the construction contract;
56 (4) An agr eement, pro vision, covenant, clause, or understanding in, collateral to,
57 implied in, or affecting a construction contract req uiring one party to a construction
58 contract to perform, pr ovide, 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 agr eement made and enter ed into prior to performing, pr oviding, 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 agr eement, pro vision, covenant, clause, or understanding in, collateral to,
64 implied in, or affecting a construction contract req uiring 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 r ecover any amount in dispute as a condition for receivi ng
67 payment of an amount not in dispute;
68 (6) An agr eement, pro vision, 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) T erminate or suspend the construction contract;
72 (b) W ithhold, deduct, back charge, set off, or red irect payments otherwise due to
73 another party to the construction contract;
74 (c) T ake possession of equipment, materials, appliances, pr operty , or tools of
75 another party to the construction contract;
76 (d) T ake over and finish the work of another party to the construction contract;
77 or
78 (e) T ake any other action detrimental to another party to the construction
79 contract for any reas on 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 cur e the br each, defect, or deficiency serving as the basis for
82 taking the adverse action and giving a reas onable opportunity to cur e the same;
83 (7) An agr eement, pro vision, 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 r equir es any litigation, arbitration, or other dispute
86 r esolution pr oceeding arising fr om the construction contract to be conducted in another
87 state; and
88 (8) An agr eement, pro vision, 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
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91 payment by a subcontractor to a sub-subcontractor or supplier at any tier , is a condition
92 pr ecedent 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 prov ision that requ ires the owner to pay the contractor within
97 forty days after r eceipt 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 pr ovision shall be deemed to
100 include such pr ovision notwithstanding any language to the contrary contained in the
101 construction contract or other contract documents incorporated ther ein or otherwise
102 governing the construction contract. An owner shall not be req uired 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 reas onable 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 r eceives the contractor's invoice or pay application and shall pr ovide:
113 (a) The amount the owner intends to withhold;
114 (b) The specific reas ons 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 res ponsible for the noncompliant work with
117 sufficient information to allow the contractor to determine which, if any , subcontractor
118 or supplier may be res ponsible for the materially noncompliant work; and
119 (d) The extent or percen tage of the amount withheld and apportioned between
120 all parties and trades, if mor e than one, believed to be ultimately r esponsible for the
121 materially noncompliant work. Any such notice that fails to reas onably apportion
122 r esponsibility between or among multiple parties and trades shall be deemed to be null
123 and void and ineffective.
124
125 Failur e by the owner to give such notice within fifteen days after the owner recei ves 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
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128 materially noncompliant work was discover ed and that such work was not reas onably
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 pr ovision that r equir es the contractor to pay the
1 3 2 subcontractor within seven days after receip t of payment fr om the owner for the
133 subcontractor's work. Any construction contract that does not contain such a prov ision
134 shall be deemed to include such pr ovision notwithstanding any language to the contrary
135 contained in the construction contract or other contract documents incorporated
136 ther ein or otherwise governing the construction contract. W ithin two business days
137 after receip t of payment fr om the owner for one or mor e subcontractors' work, the
138 contractor shall notify each subcontractor in writing or electr onically of the amount of
139 payment receiv ed by the contractor for such subcontractor's work. The contractor
140 shall, within seven days of rec eipt of funds fr om the owner , rem it to each subcontractor
141 the full share of the sum receiv ed by the contractor fr om the owner for the
142 subcontractor's work. Any funds r eceived by the contractor fr om the owner for a
143 subcontractor's work that the owner does not intend to pay to the subcontractor shall
144 pr omptly be r eturned 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 pr ovided in subdivision (2) of subsection 4 of this section, the contractor shall, within
148 seven days after receipt of such information or notice, pr ovide a copy of the notice or
149 information to each subcontractor affected ther eby . The failure by the contractor to
150 give such notice or information to the subcontractor within seven days after recei pt of
151 such notice or information fr om 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 discover ed and
154 that such work was not re asonably 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 mor e fr om the subcontractor than the owner withheld fr om the
158 contractor for the subcontractor's work. The contractor shall not withhold fro m the
159 subcontractor any mor e than the owner identifies as the r esponsibility of the
160 subcontractor .
161 (4) A sub-subcontractor or supplier shall have the same rights and
1 6 2 r esponsibilities in rela tion to its subcontractor as the subcontractor has to its contractor .
163 (5) All rights and re sponsibilities shall flow down to all parties in the
164 construction contract chain no matter the tier . A lower -tier subcontractor and supplier ,
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165 at whatever tier , shall have the same rights and r esponsibilities in rel ationship 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 r esponsibilities as to the contractor as the contractor has in its
169 r elationship with the owner; a supplier to a subcontractor shall have the same rights
170 and r esponsibilities as to the subcontractor as the subcontractor has in its relat ionship
171 with the contractor; and a supplier to a contractor shall have the same rights and
172 r esponsibilities as to the contractor as the contractor has in its relat ionship with the
173 owner .
174 6. The prov isions of this section shall not apply to the rep air or rem odeling of, or
175 the addition to, any owner -occupied res idential pr operty of four units or less that the
176 owner curr ently occupies, or intends to occupy , as a r esidence within a r easonable time
177 after the completion of the repai r , r emodeling, or addition that is the subject of the
178 construction contract.
179 7. The pr ovisions of this section shall apply only to construction contracts or
180 agr eements enter ed into after August 28, 2026.
✔
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