Senate Bill 2905

AN ACT TO REQUIRE ANY CONTRACTOR OR SUBCONTRACTOR ENTERING INTO CERTAIN CONTRACTS FOR THE CONSTRUCTION, ALTERATION OR REPAIR OF ANY PRIVATE WORK TO FURNISH A PAYMENT BOND WITH GOOD AND SUFFICIENT SURETY; TO PROVIDE FOR THE RIGHT TO SUE ON THE PAYMENT BOND FOR THE UNPAID LABOR FURNISHED OR MATERIAL USED DURING THE WORK PROVIDED FOR IN THE CONTRACT; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. (1) Any contractor entering into a formal contract which is valued at One Million Dollars ($1,000,000.00) or greater with any person, firm or corporation, for the construction, alteration or repair of any private work, before entering into such contract, shall furnish to the person, firm or corporation, a payment bond with good and sufficient surety as follows:

(a) The payment bond shall be payable to the person, firm or corporation but conditioned for the prompt payment of all persons supplying labor or material or equipment used in the prosecution of the work under the contract, for the use of each such person, in an amount not less than the amount of the contract; and

(b) The payment bond shall be made by any surety company authorized by the Department of Insurance to do business in the State of Mississippi.

(2) Every person who has furnished labor or material used in the prosecution of the work provided for in such contract, in respect of which a payment bond is furnished and who has not been paid in full before the expiration of a period of ninety (90) days after the date on which the last of the labor was performed by him or the last of the material or equipment were furnished by him and for which such claim is made, provided the same has been approved, where required, by the person, firm or corporation or its architect of engineers, or such approval is being withheld as a result of unreasonable acts of the contractor, shall have the right to sue on the payment bond for the amount, or the balance thereof that is due and payable, but unpaid at the time of institution of such suit and to prosecute the action to final execution and judgment. Notwithstanding anything to the contrary herein, if the amount claimed in such action is subject to contractual provisions or conditions between the parties involved in such action, the action shall be abated pending the performance of the provisions and the fulfillment of the conditions.

(3) Any person having direct contractual relationship with a subcontractor but no contractual relationship express or implied with the contractor furnishing payment bond shall have a right of action upon the payment bond upon giving written notice to the contractor within ninety (90) days from the date on which the person performed the last of the labor or furnished or supplied the last of the material or equipment for which such claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom the material or equipment was furnished or supplied or for whom the labor was done or performed. The notice shall be given in writing by the claimant to the contractor or surety at any place where the contractor or surety maintains an office of conducts business. The notice may be personally delivered by the claimant to the contractor or surety, or it may be mailed by certified mail, return receipt requested, postage prepaid, to the contractor or surety. No such action may be maintained by any person not having a direct contractual relationship with the contractor-principal, unless the notice required by this section shall have been given.

(4) The only persons protected by such payment bond, subject to the notice provisions of this section are:

(a) Subcontractors and material or equipment suppliers of the contractor;

(b) Sub-subcontractors and material or equipment suppliers of those subcontractors named in paragraph (a) of this subsection; and

SECTION 2. Section 1 of this act shall be codified within Chapter 7 of Title 87, Mississippi Code of 1972.

SECTION 3. This act shall take effect and be in force from and after July 1, 2012.