bill letting contractors void clauses they never got to read

The text as introduced · 1,113 words

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.