State of Illinois
90th General Assembly
Legislation

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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
                            -5-                LRB9000232KRkb
 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.

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