1765-S AMH LANT PERR 057

SHB 1765 - H AMD 394

By Representative Lantz

ADOPTED 3/14/2007

   Strike everything after the enacting clause and insert the following:

   "NEW SECTION. Sec. 1. A new section is added to chapter 4.24 RCW to read as follows:

   (1) Subject to the other provisions of this section, any clause in a construction contract that purports to waive, release, or extinguish the claim rights of a contractor, subcontractor, or supplier to damages or an equitable adjustment based on failure to submit claim notice or claim-related documentation in a specified time frame or form is enforceable if the clause includes the following provisions:

   (a) Initial notice of an event giving rise to a claim is required to be submitted:

   (i) Within seven calendar days following the occurrence of the event;

   (ii) In writing; and

   (iii) To the party, as specified in the contract, to whom the claim is being made.

   (b) Documentation of the claim, as specified in subsection (1)(c) below, is required to be provided:

   (i) Within thirty calendar days following the occurrence of the event giving rise to the claim;

   (ii) In writing; and

   (iii) To the party, as specified in the contract, to whom the claim is being made.

   (c) Documentation of the claim is required to be submitted by the claiming party that provides the following information, in sufficient detail and in a format to allow the party to whom the claim is being made to understand the claim and respond:

   (i) A detailed factual description of the claim and the bases for the claim, providing all necessary dates, locations, and items of work affected by the claim;

   (ii) A description of the specific provisions of the contract that support the claim;

   (iii) Identification and copies of any documents that support the claim and a description of any oral communications that support the claim;

   (iv) An estimated dollar cost, if any, of the claim and how that estimate was determined; and

   (v) An analysis of the progress schedule showing the schedule change or disruption if the party submitting the claim is asserting a schedule change or disruption.

   (d) If the claim is continuing, the party to whom the claim is being made may request the information identified above be supplemented.

   (2) If a contractor, subcontractor, or supplier fails to meet the notice and documentation requirements of subsection (1), the contractor shall nonetheless be deemed to have complied with those requirements if:

   (a) The required initial notice and documentation are given and provided within fifteen days and forty-five days, respectively, following the occurrence of the event giving rise to the claim; and

   (b) The party pursuing the claim proves by a preponderance of the evidence that the party receiving the notice or documentation was not prejudiced by the later receipt of the notice or documentation.

   (3) Any clause in a construction contract that purports to waive, release, or extinguish the claim rights of a contractor, subcontractor, or supplier to damages or an equitable adjustment based on failure to submit claim notice or claim-related documentation pursuant to provisions that obligate the party pursuing the claim to provide more information than described in subsection (1) above, or provide such information earlier than the time specified in subsection (1) of this section, is enforceable against a contractor, subcontractor, or supplier only if the party to whom the claim is being made is prejudiced as a result of the failure. The party failing to provide such timely notice or documentation has the burden to prove, by a preponderance of the evidence, that the party failing to receive such timely notice or documentation was not prejudiced by such failure. For the purpose of this subsection, "prejudiced" means being deprived of the opportunity to mitigate cost, time, or both cost and time impacts caused by the event or combination of events giving rise to the claim.

   (4) Notwithstanding the provisions of subsections (1), (2) and (3) of this section, all claims for damages or an equitable adjustment must be submitted within thirty calendar days of a project's substantial completion, as defined in the construction contract.

   (5) Subsections (3) and (4) of this section do not apply to any contractual requirement that a formal claim be submitted within a certain time frame or contain specified documentation following the completion or termination of a contract as a condition precedent to seeking mediation, arbitration, or judicial relief.

   (6) For purposes of this section, "construction contract" has the same meaning as the term is defined in RCW 4.24.370.

   Sec. 2. RCW 4.24.370 and 1979 ex.s. c 264 s 2 are each amended to read as follows:

   "Construction contract" for purposes of RCW 4.24.360 and section 1 of this act means any contract or agreement for the construction, alteration, repair, addition to, subtraction from, improvement to, or maintenance of, any building, highway, road, railroad, excavation, or other structure, project, development, or improvement attached to real estate, including moving and demolition in connection therewith.

   Sec. 3. RCW 4.24.380 and 1979 ex.s. c 264 s 3 are each amended to read as follows:

   (1) The provisions of RCW 4.24.360 shall apply to contracts or agreements entered into after September 1, 1979.

   (2) This act applies to contracts or agreements entered into on or after January 1, 2008."

EFFECT: Criteria are established for the enforceability of construction contract clauses that purport to waive a contractor's claim right for failure to meet claim notice requirements.

   ∙     A claim waiver provision is enforceable if it requires the contractor to submit notice to the project owner within seven days of an event giving rise to a claim, and requires specified documentation of the claim within 30 days.

   ∙     If a contractor fails to meet the initial notice and documentation requirements, the contractor may nonetheless be deemed to have complied if notice is given within 15 days and documentation is provided within 45 days, and the contractor proves by a preponderance that the project owner was not prejudiced by the later compliance.

   ∙     A claim waiver provision that has shorter time periods for notice and documentation, or that requires more than the specified documentation, is enforceable only if the project owner is prejudiced by the contractor's failure to meet those more stringent contract requirements. In such a case, the contractor has the burden of showing by a preponderance of the evidence that the owner was not prejudiced.

   ∙     In addition to any other requirements, all claims must be submitted within 30 days of substantial completion of the project.

The portion of the act relating to waiver provisions with shorter time periods, and the portion of the act requiring that all claims be filed within 30 days of substantial completion, do not apply to contract clauses that require a formal claim be submitted following completion or termination of a contract in order to seek mediation, arbitration, or judicial relief.

The act applies to contracts entered into on or after January 1, 2008.