A.R.S. § 32-1129.05(A) lists several provisions in construction contracts that are against Arizona’s public policy and are void and unenforceable. The section applies to any “provision, covenant, clause or understanding in, collateral to or affecting a construction contract.” The term “construction contract” is broadly defined in A.R.S. §32-1129 to include any “written or oral agreement relating to the construction, alteration, repair, maintenance, moving or demolition of any building, structure or improvement or relating to the excavation of or other development or improvement of land.” This definition is probably not broad enough to cover architect-engineer professional services contracts.[123]
A.R.S. § 32-1129.05(A)(1) states that any provision that makes the contract “subject to the laws of another state” is void and against Arizona’s public policy. This prohibition against choice of law provisions in construction contracts is intended to prevent the parties from circumventing Arizona’s prompt payment protections and requirements by making the contract subject to the laws of another state. Prompt payment laws in other states include similar provisions[124] and they are generally enforced.[125] But one federal court opted not to enforce a similar statute.[126]
A.R.S. § 32-1129.05(A)(1) further provides that the following contract clause is void and against public policy: a provision that requires any litigation to be conducted in another state. In other words, a forum selection clause in the construction contract requiring the matter to be adjudicated outside of Arizona is void and against public...
