Limit Contractor Liability in State Contracts.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 2
HOUSE BILL 740
Committee Substitute Favorable 6/17/25

Short Title: Limit Contractor Liability in State Contracts. (Public)
Sponsors:
Referred to:
April 3, 2025
*H740-v-2*
A BILL TO BE ENTITLED 1
AN ACT TO ESTABLISH LIMITS OF CONTRACTOR LIABILITY UNDER CER TAIN 2
STATE PROCUREMENT CONTRACTS. 3
The General Assembly of North Carolina enacts: 4
SECTION 1. Article 3 of Chapter 143 of the General Statutes is amended by adding 5
a new section to read: 6
"§ 143-49.3. Contractor liability in State contracts. 7
(a) All contracts subject to the provisions of this Article and Article 8 of this Chapter 8
shall include a limitation on the contractor's liability to the State for damages. Except as otherwise 9
provided in this section, the limitation of liability shall be for damages arising from any cause of 10
action. The amount of liability shall be determined based on the nature of the goods, services, or 11
construction work covered by the contract; however, there shall be a presumptive limitation of 12
no more than two times the value of the contract. Limitation of liability pursuant to this section 13
shall specifically include the contractor's liability for damages. The amount of liability for 14
damages may be raised to no more than three times the value of the contract if all of the following 15
apply: 16
(1) The Secretary or the Secretary's designee completes a risk assessment prior to 17
the bid solicitation or request for proposals that determines an increase in the 18
liability amount is necessary to protect the State's best interests. 19
(2) The bid solicitation or request for proposal s indicates that increased liability 20
will be required for the resulting contract. 21
(b) Prior to entering into any contract subject to the provisions of this Article or Article 22
8 of this Chapter, the Secretary or the Secretary 's designee shall reasonably determine that the 23
contractor possesses sufficient financial re sources, either independently or through third -party 24
sources, such as insurance, to satisfy the agreed upon limitation of liability. The limitation of 25
liability required by this section shall not apply to liability of the contractor for intentional or 26
willful misconduct, damage to tangible personal property, or physical injuries to persons. 27
Nothing in this section limits the contractor's liability directly to third parties or affects the rights 28
and obligations related to contribution among joint tortfeasors established by Chapter 1B of the 29
General Statutes and other applicable law. 30
(c) The Secretary may impose a fee not to exceed two hundred fifty dollars ($250.00) to 31
review a contractor's financial resources. 32
(d) Not later than March 1 of each year , the Secretary shall report annually to the Joint 33
Legislative Commission on Governmental Operations and the Joint Legislative Oversight 34
Committee on General Government regarding every contract containing liability amounts of 35
more than two times the value of the contract." 36
General Assembly Of North Carolina Session 2025
Page 2 House Bill 740-Second Edition
SECTION 2. This act becomes effective October 1, 2025, and applies to contracts 1
awarded, renewed, or amended on or after that date. 2