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90_SB0707
New Act
30 ILCS 805/8.21 new
Creates the Equitable Construction Act. Requires certain
provisions concerning notification of suspect physical
conditions of the surface or subsurface at the improvement
site, investigation of the improvement site, written
modification of time and cost provisions, suspension of work,
or termination of work to be included in any contract between
a contractor and governmental entity for an improvement that
exceeds $75,000. Provides for modification of the contract
in certain instances. Allows the contractor, in certain
instances, to complete performance of a contract and later
maintain a cause of action against the governmental entity to
recover costs. Provides that this Act shall be enforced, to
the extent possible, consistenly with other laws, but in the
case of a conflict, this Act shall pervail. Limits the
concurrent exercise of home rule powers. Amends the State
Mandates Act to require implementation without reimbursement.
Effective immediately.
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1 AN ACT to create the Equitable Construction Act.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5 Equitable Construction Act.
6 Section 5. Definitions. As used in this Act:
7 "Contractor" means a person who contracts with a
8 governmental entity to improve real property or perform or
9 manage construction services. "Contractor" does not include a
10 person licensed under the Illinois Architecture Practice Act
11 of 1989, the Professional Engineering Act of 1989, or the
12 Illinois Professional Land Surveyor Act of 1989.
13 "Governmental entity" means the State, units of local
14 government, school districts, and agencies and political
15 subdivisions of any other governmental entity.
16 "Improve" means to build, alter, repair, or demolish an
17 improvement upon, connected with, or beneath the surface of
18 any real property, to excavate, clear, grade, fill, or
19 landscape any real property, to construct driveways and
20 roadways, or to perform labor upon improvements.
21 "Improvement" includes, but is not limited to, all or any
22 part of any building, structure, erection, alteration,
23 demolition, excavation, clearing, grading, filling,
24 landscaping, trees, shrubbery, driveways, and roadways on
25 real property.
26 "Person" means an individual, corporation, partnership,
27 association, governmental entity, or other legal entity.
28 "Real property" means the real estate that is improved,
29 including, but not limited to, lands, leaseholds, tenements,
30 hereditaments, and improvements placed on the real property.
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1 Section 10. Required contractual terms. A contract
2 between a contractor and a governmental entity for an
3 improvement that exceeds $75,000 shall contain all of the
4 following provisions:
5 (a) If a contractor discovers either of the following
6 physical conditions of the surface or subsurface at the
7 improvement site, before disturbing the physical condition,
8 the contractor shall promptly notify the governmental entity
9 of the physical condition in writing.
10 (1) A subsurface or a latent physical condition at
11 the site is differing materially from those indicated in
12 the improvement contract.
13 (2) An unknown physical condition at the site is of
14 an unusual nature differing materially from those
15 ordinarily encountered and generally recognized as
16 inhering in work of the character provided for in the
17 improvement contract.
18 (b) If the governmental entity receives a notice under
19 subsection (a), the governmental entity shall promptly
20 investigate the physical condition.
21 (c) If the governmental entity determines that the
22 physical conditions do materially differ and will cause an
23 increase or decrease in costs or additional time needed to
24 perform the contract, the governmental entity's determination
25 shall be made in writing and an equitable adjustment shall be
26 made and the contract modified in writing accordingly.
27 (d) The contractor cannot make a claim for additional
28 costs of time because of a physical condition unless the
29 contractor has complied with the notice requirements of
30 subsection (a). The governmental entity may extend the time
31 required for notice under subsection (a).
32 (e) The contractor cannot make a claim for an adjustment
33 under the contract after the contractor has received the
34 final payment under the contract.
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1 Section 15. Suspension of work. In addition to the
2 requirements of Sections 10 and 20, a contract between a
3 contractor and a governmental entity for an improvement that
4 exceeds $75,000 shall contain the following provisions:
5 (a) The governmental entity may order the contractor in
6 writing to suspend, delay, or interrupt all or any part of
7 the work for such period of time as the governmental entity
8 may determine to be appropriate for the convenience of the
9 governmental entity.
10 (b) If the performance of all or any part of the work is
11 suspended, delayed, or interrupted for an unreasonable amount
12 of time by an act of the governmental entity, or by the
13 governmental entity's failure to act within a reasonable
14 time, the governmental entity shall make an adjustment for
15 any increase in the cost of performance of the contract
16 (excluding profit) necessarily caused by the unreasonable
17 suspension, delay, or interruption and modify the contract in
18 writing. No adjustment shall be made under this Section,
19 however, for any suspension, delay, or interruption to the
20 extent (i) that performance would have been so suspended,
21 delayed, or interrupted by any other cause, including the
22 fault or negligence of the contractor, or (ii) for which an
23 equitable adjustment is provided for or excluded under any
24 other provision of the contract.
25 (c) No claim under this Section shall be allowed (i) for
26 costs incurred more than 20 days before the contractor
27 notified the governmental entity in writing of the act, or
28 failure to act, involved (this requirement does not apply to
29 a claim resulting from a suspension order) and (ii) unless
30 the amount claimed is asserted in writing as soon as
31 practical after the termination of the suspension, delay, or
32 interruption, but not later than the date of final payment
33 under the contract.
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1 Section 20. Termination. In addition to the
2 requirements of Sections 10 and 15, a contract between a
3 contractor and a governmental entity for an improvement that
4 exceeds $75,000 shall contain the following provisions:
5 (a) The contract may be terminated in whole or in part
6 in writing by either party in the event of substantial
7 failure by the other party to fulfill its obligations under
8 this contract through no fault of the terminating party,
9 provided that no termination may be effected unless the other
10 party is given (i) not less than 10 calendar days' written
11 notice (delivered by certified mail, return receipt
12 requested) of intent to terminate and (ii) an opportunity for
13 consultation with the terminating party prior to termination.
14 (b) The contract may be terminated in whole or in part
15 in writing by the governmental entity for its convenience,
16 provided that the contractor is given (i) not less than 10
17 calendar days' written notice (delivered by certified mail,
18 return receipt requested) of intent to terminate and (ii) an
19 opportunity for consultation with the terminating party prior
20 to termination.
21 (c) If termination for default is effected by the
22 governmental entity, an equitable adjustment in the price
23 provided for in the contract shall be made, but (i) no amount
24 shall be allowed for anticipated profit on unperformed
25 services or other work and (ii) any payment due to the
26 contractor at the time of termination may be adjusted to
27 cover any additional costs to the governmental entity because
28 of the contractor's default. If termination for default is
29 effected by the contractor, or if termination for convenience
30 is effected by the governmental entity, the equitable
31 adjustment shall include a reasonable profit for services or
32 other work performed. The equitable adjustment for any
33 termination shall provide for payment to the contractor for
34 services rendered and expenses incurred prior to the
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1 termination, in addition to termination settlement costs
2 reasonably incurred by the contractor relating to commitments
3 that had become firm prior to the termination.
4 (d) Upon receipt of a termination action under
5 subsections (a) or (b), the contractor shall (i) promptly
6 discontinue all affected work (unless the notice directs
7 otherwise) and (ii) deliver or otherwise make available to
8 the governmental entity all data, drawings, specifications,
9 reports, estimates, summaries, and other information and
10 materials that may have been accumulated by the contractor in
11 performing the contract, whether completed or in process.
12 (e) Upon termination under subsections (a) and (b), the
13 governmental entity may take over the work and may award
14 another party a contract to complete the work under the
15 contract.
16 (f) If, after a termination for failure of the
17 contractor to fulfill contractual obligations, it is
18 determined that the contractor had not failed to fulfill
19 contractual obligations, the termination shall be deemed to
20 have been for the convenience of the governmental entity. In
21 this event, adjustment of the contract price shall be made as
22 provided in subsection (c).
23 Section 25. Completion of performance; cause of action.
24 If the contractor does not agree with the governmental
25 entity's determination, with the consent of the governmental
26 entity the contractor may complete performance on the
27 contract and bring a cause of action to recover the actual
28 increase in contract time and costs incurred because of the
29 physical condition of the improvement site.
30 Section 30. Incorporation of terms. If an improvement
31 contract does not contain the provisions required under
32 Sections 10, 15, and 20, those provisions are deemed to be
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1 incorporated into and considered part of the improvement
2 contract.
3 Section 35. Resolution with other laws. This Act does
4 not limit the rights or remedies otherwise available to a
5 contractor or the governmental entity under any other law;
6 exempt that in the event of any conflict between this Act and
7 any other law, this Act shall prevail and control.
8 Section 50. Home rule. Home rule units may not enter
9 into contracts inconsistent with this Act. This Act is a
10 limitation on the exercise of concurrent power by home rule
11 units under subsection (i) of Section 6 of Article VII of the
12 Illinois Constitution.
13 Section 55. The State Mandates Act is amended by adding
14 Section 8.21 as follows:
15 (30 ILCS 805/8.21 new)
16 Sec. 8.21. Exempt mandate. Notwithstanding Sections 6
17 and 8 of this Act, no reimbursement by the State is required
18 for the implementation of any mandate created by this Act.
19 Section 99. Effective date. This Act takes effect upon
20 becoming law.