HBA-CCH H.B. 2311 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2311 By: Bosse Business & Industry 3/13/2001 Introduced BACKGROUND AND PURPOSE On a typical construction project, the property owner contracts with a general contractor who, in turn, contracts with subcontractors to perform electrical, plumbing, or other work. Most contracts between general contractors and subcontractors contain clauses that make payment from the general contractor to the subcontractor contingent upon the general contractor being paid by the owner. By agreeing to a contingent payment clause, the subcontractor waives any contractual right to sue the general contractor for nonpayment. As a result, subcontractors may not receive compensation for the work they perform. House Bill 2311 provides that a contract between a general contractor and a subcontractor that contains a contingent payment clause is void. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 2311 amends the Business & Commerce Code to establish the Subcontractor's Right to be Paid Act. The bill makes void any provision in a contract or other agreement that provides payment to a subcontractor for work performed or materials furnished for the improvement of real property, that is conditioned on the receipt of payment by the general contractor or another subcontractor from another person, including the owner for whom an improvement is made. The bill prohibits a person from waiving this provision by contract or other means, and provides that a purported waiver of this provision is void. EFFECTIVE DATE September 1, 2001.