2023 New York Laws › STF - State Finance › Article 9 - Contracts › 137 - Bond to Secure Payment of Certain Claims Arising From a Public Improvement; Enforcement.

§  137. Bond to secure payment of certain claims arising from a public
improvement; enforcement. 1. In addition to other bond or bonds, if any,
required by law for the completion of a work specified in a contract for
the prosecution of a public improvement for the  state  of  New  York  a
municipal  corporation,  a  public  benefit  corporation or a commission
appointed pursuant to law, or in the absence of  any  such  requirement,
the  comptroller  may  or  the other appropriate official, respectively,
shall nevertheless require prior to the approval of any such contract  a
bond guaranteeing prompt payment of moneys due to all persons furnishing
labor  or  materials  to  the  contractor  or  any subcontractors in the
prosecution of the work  provided  for  in  such  contract.  Whenever  a
municipal corporation issues a permit subject to compliance with section
two hundred twenty of the labor law, such permittee or its contractor or
subcontractors  furnishing  workers shall post a payment bond subject to
this section. Provided, however, that all performance bonds and  payment
bonds  may,  at  the  discretion of the head of the state agency, public
benefit corporation or commission, or his or her designee, be  dispensed
with  for  the  completion  of  a  work  specified in a contract for the
prosecution of a public improvement for the state of New York for  which
bids  are  solicited where the aggregate amount of the contract is under
one hundred thousand dollars and provided further, that in a case  where
the  contract is not subject to the multiple contract award requirements
of section one hundred thirty-five of this  article,  such  requirements
may be dispensed with where the head of the state agency, public benefit
corporation  or  commission  finds  it  to be in the public interest and
where the aggregate amount of the contract awarded or to be  awarded  is
less than two hundred thousand dollars. Provided further, that in a case
where a performance or payment bond is dispensed with, twenty per centum
may  be retained from each progress payment or estimate until the entire
contract work has been completed and accepted, at which time the head of
the state  agency,  public  benefit  corporation  or  commission  shall,
pending   the   payment  of  the  final  estimate,  pay  not  to  exceed
seventy-five per centum of the amount of the retained percentage.
2. A copy of such payment bond shall be kept in the office of the head
of the department or bureau having charge of the public  improvement  in
connection  with  which the bond was given and a copy shall also be kept
in the office of the comptroller or  other  appropriate  official;  such
copies shall be open to public inspection.
3. Every person who has furnished labor or material, to the contractor
or  to a subcontractor of the contractor, in the prosecution of the work
provided for in the contract and who has not been paid in full  therefor
before  the expiration of a period of ninety days after the day on which
the last of the labor was performed or material was furnished by him for
which the claim is made, shall have the right to  sue  on  such  payment
bond  in  his own name for the amount, or the balance thereof, unpaid at
the time of commencement of the action; provided, however, that a person
having a direct contractual relationship with  a  subcontractor  of  the
contractor  furnishing  the payment bond but no contractual relationship
express or implied with such contractor shall not have a right of action
upon the bond  unless  he  shall  have  given  written  notice  to  such
contractor  within  one  hundred  twenty days from the date on which the
last of the labor  was  performed  or  the  last  of  the  material  was
furnished,  for  which  his  claim  is  made,  stating  with substantial
accuracy the amount claimed and the  name  of  the  party  to  whom  the
material  was  furnished or for whom the labor was performed. The notice
shall be served by delivering the same personally to the  contractor  or
by  mailing the same by registered mail, postage prepaid, in an envelope
addressed to the contractor at any place where he maintains an office or

conducts his business or at his residence; provided, however, that where
such notice is actually received by the contractor by other means,  such
notice shall be deemed sufficient.
4.  (a)  A  payment bond required pursuant to this section may provide
that the place of trial of an action on the bond shall be in the  county
in which the contract of the contractor who furnished the bond was to be
performed  or  if  such  contract  was  to be performed in more than one
county, then in any such county, and not elsewhere.
(b) Except as provided in section two hundred twenty-g  of  the  labor
law,  no  action  on  a  payment bond furnished pursuant to this section
shall be commenced after the expiration of one year  from  the  date  on
which  the  public  improvement  has  been completed and accepted by the
public owner.
(c) In any action  on  a  payment  bond  furnished  pursuant  to  this
section,  any  judgment in favor of a subcontractor or material supplier
may include provision for  the  payment  of  interest  upon  the  amount
recovered from the date when demand for payment was made pursuant to the
labor  and material payment bond and provided further that the court may
determine and award reasonable attorney's fee to either  party  to  such
action  when,  upon  reviewing the entire record, it appears that either
the original claim or the defense interposed to such  claim  is  without
substantial basis in fact or law.
5. (a) The expression "furnishes material" or other similar expression
wherever  used in this section shall be deemed to include the reasonable
rental value for the  period  of  actual  use  of  machinery,  tools  or
equipment,  and  the  value of compressed gases furnished for welding or
cutting, and the value of fuel  and  lubricants  consumed  by  machinery
operating  on  the  improvement, or by motor vehicles owned, operated or
controlled  by  the  contractor  or  his  subcontractors  while  engaged
exclusively   in   the  transportation  of  materials  to  or  from  the
improvement for the purposes thereof.
(b) The expression "moneys due to  persons  furnishing  labor  to  the
contractor  or  his  subcontractors"  includes all sums payable to or on
behalf  of  persons  furnishing  labor  to   the   contractor   or   his
subcontractors, for wages, health, welfare, non-occupational disability,
retirement,  vacation  benefits,  holiday  pay,  life insurance or other
benefits, payment of which is required pursuant to the labor law  or  by
the  contract  in  connection  with  which the bond is furnished or by a
collective  bargaining  agreement  between  organized  labor   and   the
contractor or subcontractor, and which are computed upon labor performed
in the prosecution of the contract. A trustee or other person authorized
to collect such payments shall have the right to sue on the payment bond
in  his  own  name  and subject to the same conditions as if he were the
person performing the labor upon which such sums are computed.