HB3874 - Relating to voidable provisions contained in certain construction contracts.

  89R4644 PRL-D     By: Hayes H.B. No. 3874       A BILL TO BE ENTITLED   AN ACT   relating to voidable provisions contained in certain construction   contracts.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 272.0001, Business & Commerce Code, is   amended to read as follows:          Sec. 272.0001.   DEFINITIONS  [ DEFINITION ]. In this chapter :                 (1)  "Construction [ ,"construction ] contract" means a   contract, subcontract, or agreement entered into or made by an   owner, architect, engineer, contractor, construction manager,   subcontractor, supplier, or material or equipment lessor for the   design, construction, alteration, renovation, remodeling, or   repair of, or for the furnishing of material or equipment for, a   building, structure, appurtenance, or other improvement to or on   public or private real property, including moving, demolition, and   excavation connected with the real property. The term includes an   agreement to which an architect, engineer, or contractor and an   owner's lender are parties regarding an assignment of the   construction contract or other modifications thereto.                 (2)     "Copy" means an accurate reproduction of an   original document reproduced in paper form or in an electronic   format that a person can access, download, save, and print for the   person's own records.                 (3)     "Original contract" means an agreement to which an   owner is a party either directly or by implication of law.                   (4)     "Original contractor" means a person contracting   with an owner directly or through the owner's agent.                 (5)     "Owner" means a person who owns any interest in   real property or an authorized agent, trustee, or receiver of the   person.                 (6)     "Subcontractor" means a person who furnishes labor   or materials to fulfill an obligation to an original contractor or   to a subcontractor of any tier to perform all or part of the work   required by an original contract.          SECTION 2.  The heading to Section 272.001, Business &   Commerce Code, is amended to read as follows:          Sec. 272.001.  VOIDABLE CONTRACT PROVISIONS [ PROVISION ].          SECTION 3.  Section 272.001, Business & Commerce Code, is   amended by adding Subsections (c), (d), (e), (f), (g), (h), and (i)   to read as follows:           (c)     Except as provided by Subsections (g) and (h), a   provision in a construction contract between an original contractor   and owner that incorporates another document that contains terms   and conditions, by reference or otherwise, is voidable by the   original contractor if, on written request, the owner does not   provide a copy of the incorporated document to the original   contractor on or before the 10th day before the date the contract is   executed. This subsection does not preclude the owner from   redacting information from a document to be incorporated into the   contract, provided that any redacted information may not be   incorporated into the contract by reference or otherwise.   The   owner may request the original contractor to sign, date, and submit   to the owner a written statement acknowledging receipt of the copy   of the incorporated document. The written statement acknowledging   receipt must be provided separately from the construction contract.           (d)     Except as provided by Subsections (g) and (h), a   provision in a construction contract between a subcontractor and an   original contractor that incorporates another document that   contains terms and conditions, by reference or otherwise, is   voidable by the subcontractor if, on written request, the original   contractor does not provide a copy of the incorporated document to   the subcontractor on or before the 10th day before the date the   contract is executed. This subsection does not preclude the   original contractor from redacting information from a document to   be incorporated into the contract, provided that any redacted   information may not be incorporated into the contract by reference   or otherwise.   The original contractor may request the   subcontractor to sign, date, and submit to the original contractor   a written statement acknowledging receipt of the copy of the   incorporated document. The written statement acknowledging   receipt must be provided separately from the construction contract.           (e)     Except as provided by Subsections (g) and (h), a   provision in a construction contract between a subcontractor and   another subcontractor that incorporates another document that   contains terms and conditions, by reference or otherwise, is   voidable by the subcontractor who is to furnish labor or materials   to fulfill an obligation to the other subcontractor if, on written   request, the subcontractor to whom the requesting subcontractor is   obligated does not provide a copy of the incorporated document to   the requesting subcontractor on or before the 10th day before the   date the contract is executed. This subsection does not preclude a   subcontractor from redacting information from a document to be   incorporated into the contract, provided that any redacted   information may not be incorporated into the contract by reference   or otherwise. The subcontractor providing the copy of the document   may request the other subcontractor to sign, date, and submit a   written statement acknowledging receipt of the copy of the   incorporated document. The written statement acknowledging   receipt must be provided separately from the construction contract.           (f)     A provision in a construction contract made void by a   party to the contract under Subsection (c), (d), or (e) is void only   to the extent of the provision's applicability to the incorporated   document or a portion of the incorporated document that was not   provided to the party.           (g)     Subsections (c), (d), and (e) do not apply to the   incorporation of a publicly available document accessible with or   without charge.           (h)     Subsections (c), (d), and (e) do not apply in an   emergency if all documents incorporated by reference are provided   simultaneously with the contract prior to execution.   For purposes   of this subsection, "emergency" means a sudden, urgent occurrence   that requires immediate action.           (i)     An owner, original contractor, or subcontractor may   provide a copy of an incorporated document to the other party to a   construction contract under Subsection (c), (d), or (e) by   providing a link to the document on an Internet website or file   hosting service that may be accessed by the other party free of   charge for the duration of the term of the contract. The version of   the incorporated document that is accessible on the date the party   receives the information necessary to access the document is the   version of the document that is incorporated into the contract.          SECTION 4.  Chapter 272, Business & Commerce Code, is   amended by adding Section 272.003 to read as follows:           Sec.   272.003.     WAIVER OF CHAPTER PROHIBITED. A person may   not waive this chapter, including a provision of this chapter, by   contract or other means. A purported waiver of this chapter is   against public policy and is void.          SECTION 5.  The changes in law made by this Act apply only to   a contract that is entered into or renewed on or after the effective   date of this Act.          SECTION 6.  This Act takes effect September 1, 2025.