Bill Text: CA AB552 | 2015-2016 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

---

Bill Title: Public works contracts: damages.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2015-10-02 - Chaptered by Secretary of State - Chapter 434, Statutes of 2015. [AB552 Detail]

Download: California-2015-AB552-Amended.html

---

BILL NUMBER: AB 552	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 27, 2015
	AMENDED IN ASSEMBLY  MARCH 26, 2015

INTRODUCED BY   Assembly Member O'Donnell

                        FEBRUARY 23, 2015

   An act to add Section 7203 to the Public Contract Code, relating
to public contracts.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 552, as amended, O'Donnell. Public works contracts: damages.
   Existing law prescribes requirements for contracts between private
parties and public entities, as defined.
   This bill would  require   provide that a
 public works  contracts   contract 
entered into  by a public agency, as defined, on or
after January 1, 2016,  to provide that damages recoverable
from a nonperforming party be liquidated and specified in the
contract, to provide that liquidated damages not be disproportionate
to potential actual consequential and provable damages, and to not
require that a contractor be responsible for consequential damages
unless those damages have been liquidated to a set amount, as
provided.   that contains a clause requiring a
contractor to be responsible for consequential damages is not
enforceable unless the consequential damages have been liquidated to
a set amount and identified in the public works contract.  The
bill would also make findings and declarations related to public
contracts.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  (a) The Legislature finds and declares that, as a
matter of public policy, it is in the best interest of California
taxpayers to ensure uniformity in the bidding and contracting process
for public works construction projects within the State of
California.
   (b) The Legislature further finds and declares that contractually
imposing undefined and unlimited risk on to public works construction
contractors increases public works construction costs because
construction contractors must account for the undefined and unlimited
risk, which is generally uninsurable, in their bids.
   (c) It is therefore in the best interest of California taxpayers
and public works construction contractors for the Legislature to
establish clear guidelines for how liquidated damages and
consequential damages are expressed in a public works contract.
  SEC. 2.  Section 7203 is added to the Public Contract Code, to
read: 
   7203.  (a) Public works contracts entered into by a public agency
on or after January 1, 2016, shall provide that damages recoverable
from a nonperforming party shall be liquidated and specified in the
contract in order to be enforceable against the nonperforming party.
Liquidated damages shall not be disproportionate to potential actual
consequential and provable damages, otherwise all damages shall not
be recoverable against the nonperforming party.
   (b) A public agency shall not require a contractor to be
responsible for consequential damages of any sort unless the
consequential damages have been liquidated to a set amount and
identified in a public works contract entered into on or after
January 1, 2016. 
    7203.    (a) A public works contract entered into on
or after January 1, 2016, that contains a clause requiring a
contractor to be responsible for consequential damages is not
enforceable unless the consequential damages have been liquidated to
a set amount and identified in the public works contract. 

   (c) 
    (b)  "Public agency" shall include the state, the
Regents of the University of California, a city, charter city,
county, charter county, district, public authority,  public
agency,  municipal utility, and any other political
subdivision or public corporation of the state.