By Christopher P. Sobba

The Kansas Fairness in Private Construction Contract Act recently celebrated its first birthday. You may have been impacted by the Act during its first year and, as expected, the Act will continue to have a major impact on private construction contracting in Kansas. Businesses engaged in private construction projects in Kansas should be aware of the Act's fundamental elements.

To Whom Does It Apply?
The Act generally applies to owners, contractors and subcontractors (including designers) entering into construction contracts for private construction in Kansas. The Act does not apply to single-family residential housing projects, multifamily residential housing projects of four units or less or public works projects. The Act only applies to contracts entered into after its effective date of July 1, 2005.

What Does It Do?
The primary focus of the Act is to regulate payments to contractors and subcontractors for private construction projects. The Act provides contractors and subcontractors with specific rights and remedies in instances where payments are not made in a timely fashion.

For the benefit of contractors, the Act requires that payment from the owner to contractor be made no more than 30 days after the owner receives a "timely, properly completed and undisputed" request for payment. If the owner fails to pay a contractor within the 30-day time period established by the Act, the owner must pay 18 percent interest to the contractor, beginning on the 31st day.

For the benefit of subcontractors, the Act requires that payment from the contractor to subcontractors be made within seven business days of receipt of payment from the owner (including retainage, if it has been released by the owner). This is true so long as the subcontractor has provided a "timely, properly completed and undisputed" request for payment. If the contractor fails to pay a subcontractor within seven business days, the contractor must pay 18 percent interest to the subcontractor. This same time frame and remedy also applies to all payments from a subcontractor to its lower-tier subcontractors.

Perhaps the most significant remedy allowed by the Act is the "work stoppage" remedy. If any undisputed payment is not made within seven business days after the due date, the contractor and any subcontractors (regardless of tier and upon seven additional business days' written notice to the owner and, in the case of a subcontractor, written notice to the contractor) are entitled to suspend further performance until payment is made in full.

In instances where work is appropriately suspended, the Act provides that the contract time for each contract affected by the suspension will be extended appropriately, and that the contract sum for each affected contract shall be increased by reasonable costs of demobilization, delay and remobilization. So it is easy to see the significant impact that the work stoppage remedy could have on a construction project and schedule, particularly should trades with critical path activities elect to stop work.

The Act also contains many additional provisions aimed at creating what the legislature believes to be "fairness" in private construction contracting. These include provisions that void certain contract clauses, cap retainage at 10 percent, provide attorneys fees to the prevailing party and require that any legal action to enforce the Act be brought in the county where the real property is located. These provisions, along with the other provisions of the Act, should be reviewed in detail prior to entering into a contract to which the Act applies.

Know the Act
Because of the relative newness of the Act and the life cycle of construction projects, increasing numbers of contractors and subcontractors are seeking the relief provided for in the Act. All businesses initiating private construction in Kansas would be well-served by becoming familiar with the provisions of the Act. Knowing and understanding the new ground rules will help promote a successful project, and likely a project with fewer claims.

Christopher P. Sobba, Esq., is a lawyer with the law firm of Shughart, Thomson & Kilroy in Kansas City, Mo., with experience in the area of construction litigation. You can reach him at or (816) 395-0609.
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