Title 87 — Contracts and Contractual Relations

Mississippi Code of 1972 — Title 87. Contracts and Contractual Relations

Text as published by FindLaw, current as of 2025-01-01.

Miss. Code Ann. § 1-1-9 asserts that copyright in the Mississippi Code of 1972, including catchlines, section numbering, source lines and annotations, is owned by the State of Mississippi.

Chapter 1 Gambling and Future Contracts

§ 87-1-1

Contracts, judgments, securities, conveyances made, given, granted, or executed, where the whole or any part of the consideration or foundation thereof shall be for money, or any valuable thing won, lost, or bet at any game or games, or on any horse-race, cock-fight, or at any other sport, amusement, or pastime, or on any wager whatever, or for the reimbursing or repaying any money knowingly lent or advanced for the purpose of such gaming or gambling, or to be wagered on any game, play, horse-race, cock-fight, or on any sport, amusement, pastime, or wager, shall be utterly void.

§ 87-1-3

Any sale, mortgage, transfer, or conveyance of any estate, real or personal, to any person or to another for his use or benefit, or in any manner to satisfy or secure money or other thing won, or any part thereof, or to secure or satisfy any money or other thing lent or advanced on any consideration, foundation, or purpose mentioned in Section 87-1-1, or any part thereof, shall inure to and vest in the wife and children of said mortgagor, seller, vendor, bargainor, or lessor, the whole estate, title, and interest of such person sold, mortgaged, bargained, transferred, or conveyed, as though such person had died intestate. And the parties to any action founded on any contract or transaction within this chapter, shall be compelled to answer any bill of discovery touching the same.

§ 87-1-5

If any person, by playing at any game whatever, or by betting on the sides or hands of such as do play at any game, or by betting on any horse race or cockfight, or at any other sport or pastime, or by any wager whatever, shall lose any money, property, or other valuable thing, real or personal, and shall pay or deliver the same or any part thereof, the person so losing and paying or delivering the same, or his wife or children, may sue for and recover such money, property, or other valuable thing so lost and paid or delivered, or any part thereof, from the person knowingly receiving the same, with costs. However, this section shall not apply to betting, gaming or wagering:

(a) On a cruise vessel as defined in Section 27-109-1 whenever such vessel is in the waters within the State of Mississippi, which lie adjacent to the State of Mississippi south of the three (3) most southern counties in the State of Mississippi, including the Mississippi Sound, St. Louis Bay, Biloxi Bay and Pascagoula Bay;

(b) In a structure located in whole or in part on shore in any of the three (3) most southern counties in the State of Mississippi in which the registered voters of the county have voted to allow such betting, gaming or wagering on cruise vessels as provided in Section 19-3-79, if:

(i) The structure is owned, leased or controlled by a person possessing a gaming license, as defined in Section 75-76-5, to conduct legal gaming on a cruise vessel under paragraph (a) of this section;

(ii) The part of the structure in which licensed gaming activities are conducted is located entirely in an area which is located no more than eight hundred (800) feet from the mean high-water line (as defined in Section 29-15-1) of the waters within the State of Mississippi, which lie adjacent to the State of Mississippi south of the three (3) most southern counties in the State of Mississippi, including the Mississippi Sound, St. Louis Bay, Biloxi Bay and Pascagoula Bay, or, with regard to Harrison County only, no farther north than the southern boundary of the right-of-way for U.S. Highway 90, whichever is greater; and

(iii) In the case of a structure that is located in whole or part on shore, the part of the structure in which licensed gaming activities are conducted shall lie adjacent to state waters south of the three (3) most southern counties in the State of Mississippi, including the Mississippi Sound, St. Louis Bay, Biloxi Bay and Pascagoula Bay. When the site upon which the structure is located consists of a parcel of real property, easements and rights-of-way for public streets and highways shall not be construed to interrupt the contiguous nature of the parcel, nor shall the footage contained within the easements and rights-of-way be counted in the calculation of the distances specified in subparagraph (ii).

(c) On a vessel as defined in Section 27-109-1 whenever such vessel is on the Mississippi River or navigable waters within any county bordering on the Mississippi River; or

(d) That is legal under the laws of the State of Mississippi.

§ 87-1-7

Sections 87-1-1, 87-1-3 and 87-1-5 shall not apply to contracts for future delivery which are valid under succeeding sections of this chapter and shall not apply to activity which is lawfully conducted pursuant to the regulatory authority of the Mississippi Gaming Control Act (Section 75-76-1 et seq.).

§ 87-1-9

For the purposes of the following sections of this chapter the term “contract” shall be held to include sales, purchases, agreements of sale, agreements to sell and agreements to purchase, that the word “person” wherever used in the following sections shall be construed to import the plural or singular, as the case demands, and shall include individuals, associations, partnerships and corporations.

§ 87-1-11

There may be organized in any city in the State of Mississippi voluntary associations to be known as cotton exchanges, grain exchanges, boards of trade or similar institutions to receive and post quotations on cotton, grain, stocks, bonds and other commodities for the benefit of its members and other persons engaged in the production of cotton, grain and other commodities. Such associations shall adopt a uniform set of rules and regulations not incompatible with the laws, as are usual for such associations. They shall open their books to the inspection of proper courts and officers of the law when required.

§ 87-1-13

Only members of cotton exchanges, grain exchanges, boards of trade or similar institutions organized under the laws of Mississippi or any other state may provide for their use and the use of their clients, private or public wires from cities in Mississippi where such cotton exchanges, grain exchanges, boards of trade or similar institutions are located to other cities without the State of Mississippi where cotton exchanges, grain exchanges, boards of trade or similar institutions are operated, and may receive over such private or public wires and post for their own use and that of their clients and of any person engaged in the production of cotton, grain or other commodities, market quotations and market news, covering cotton, grain, stocks and other commodities, and transmit for execution contracts of sale for future delivery. In all cases it is contemplated that the delivery of the commodity purchased or sold, as the case may be, will be carried out by the principals or their successors or assignees; and that the contract for delivery thereof will be performed or discharged according to the rules of the exchange, board of trade or similar institutions where the contract is executed.

§ 87-1-15

(1) All contracts of sale for future delivery of cotton, grain, stock, or other commodities (a) made in accordance with the rules of any board of trade, exchange or similar institution where such contracts of sale are executed; and (b) actually executed on the floor of such board of trade, exchange or similar institutions and performed or discharged according to the rules thereof; and (c) when such contracts of sale are made with or through a regular member in good standing of a cotton exchange, grain exchange or similar institution organized under the laws of the State of Mississippi or any other state shall be, and they are hereby declared to be, valid and enforceable in the courts of this state according to their terms.

(2) Notwithstanding the provisions of subsection (1) of this section, contracts of sale for the future delivery of cotton in order to be valid and enforceable must not only conform to the requirements of clauses (a), (b) and (c) of subsection (1) of this section, but must also be made subject to the provisions of the United States Internal Revenue Code of 1954, subchapter D. In the event, however, that this subsection be held inoperative for any reason, then contracts for the future delivery of cotton shall be valid and enforceable if they conform to the requirements of clauses (a), (b) and (c) of subsection (1) of this section.

(3) If contracts of sale for future delivery of cotton, grain, stock, or other commodity shall conform to all of the requirements set forth above in this section, then the same shall be valid and enforceable in all the courts of this state, notwithstanding that at the time of execution of such contracts that either or both of the parties thereto did not contemplate or intend that the same should be consummated by the actual delivery and receipt of the commodity specified. The plain intent of this section, while declaring unlawful all transactions conducted in and through a “bucket shop” as hereinafter defined, is to make lawful and enforceable and to withdraw from the provisions of the gaming and wagering laws, all transactions executed upon and in accordance with the rules of a legitimate cotton, grain, stock or other commodity exchange or board of trade whether the intent of delivery of the actual commodity was present or not and this section shall be liberally construed at all times so as to effectuate this purpose.

§ 87-1-17

Any broker, agent or any other person making advances to or for account of any party to any contract falling within and satisfying the provisions of Section 87-1-15 shall be entitled to recover the amount of such advances from the party to, or for account of whom, the advances were made.

§ 87-1-19

Any contract of sale for the future delivery of cotton, grain, stocks, or other commodities, which is to be settled according to or upon the basis of the public market quotations or prices made on any board of trade, exchange or similar institutions, upon which contracts of sale for future delivery are executed and dealt in without any actual bona fide execution and the carrying out or discharge of such contracts upon the floor of such exchange, board of trade or similar institution, in accordance with the rules thereof, shall be null and void and unenforceable in any court of this state, and no action shall lie thereon at the suit of any party thereto.

§ 87-1-21

A “bucket shop” is hereby defined to be and mean any place of business wherein are made contracts of the sort or character denounced by Section 87-1-19, and the maintenance or operation of a bucket shop at any point in this state is hereby prohibited.

§ 87-1-23

Any person either as agent or principal, who knowingly enters into or assists in making any contracts of sale of the sort or character denounced by Section 87-1-19 for the future delivery of cotton, grain, stocks or other commodities, or who maintains or operates a bucket shop as that term is defined in Section 87-1-21, shall be guilty of a felony, and upon conviction thereof shall be fined in a sum not to exceed One Thousand Dollars ($1,000.00), or be imprisoned in the penitentiary not exceeding two (2) years, and any person who shall be guilty of a second offense under this chapter, in addition to the penalties above described, may upon conviction, be both fined and imprisoned in the discretion of the court, and if a corporation, it shall be liable to forfeiture of all its rights and privileges as such, and the continuance of such establishment after the first conviction shall be deemed a second offense. It shall be the duty of the attorney general to institute proceedings for the forfeiture of the charter of any corporation making itself liable to such forfeiture under the provisions of this chapter.

§ 87-1-25

Any person, whether as agent or owner, who shall rent or lease any office or place of business to any person, association of persons or corporation, to be used in, or for the purpose of negotiating or effectuating the class of contracts prohibited by this chapter, knowing such person, association of persons or corporation to be engaged in such business, shall be guilty of a misdemeanor, and on conviction shall be punished as provided by law.

§ 87-1-27

No person shall be excused in any prosecution under Sections 87-1-1 through 87-1-25, concerning gambling and future contracts, from testifying touching anything done by himself or others, contrary to the provisions of said sections; but any discovery made by a witness upon such examination shall not be used against him in any penal or criminal prosecution, and he shall be altogether pardoned of the offense so done or participated in by him.

§ 87-1-29

Every person shall furnish upon demand to any principal for whom such person has executed any contract of sale for the future delivery of any cotton, grain, stocks or other commodities a written instrument setting forth the name and location of the exchange, board of trade or similar institution upon which such contract has been executed, the date of execution of the contract and the name and address of the persons with whom such contract was executed and if such person shall refuse or neglect to furnish such statement upon reasonable demand, such refusal or neglect shall be prima facie evidence that such contract was an illegal contract within the provisions of Section 87-1-19, and that the person who executed it was engaged in the maintenance and operation of a “bucket shop” within the provisions of Section 87-1-21.

§ 87-1-31

If any person shall buy or sell commodities of any kind, to be delivered at a future day, without agreeing and intending that the commodities are to be actually delivered in kind, and the price paid, he shall be guilty of a misdemeanor, and, on conviction, shall be punished as prescribed in section 87-1-33.

§ 87-1-33

If any person shall deal in contracts called “futures,” or shall, by himself or his agent, directly or indirectly buy or sell any “future” contract, he shall be guilty of a misdemeanor, and, on conviction, shall be fined not less than Fifty Dollars ($50.00) nor more than Five Hundred Dollars ($500.00), and be imprisoned in the county jail not more than three (3) months.

Chapter 3 Power and Letters of Attorney

§ 87-3-1

All letters of attorney intended to be used in this state may be acknowledged or proved as conveyances of land are required to be, and, when so acknowledged or proved, may be recorded in like manner; and copies thereof, duly certified, shall be admitted in evidence, without accounting for the nonproduction of the original.

§ 87-3-3

Conveyances of land, or contracts relating thereto, executed by an attorney in fact for his principal, and duly acknowledged or proved, shall have the same force and effect as if executed and acknowledged by the principal; and where a conveyance by an attorney is in execution of letters of attorney, so acknowledged or proved and recorded, it shall pass the interest of the principal though not formally executed in his name.

§ 87-3-5

When a person interested in the administration of an estate in any court in this state, shall appoint an attorney in fact, resident in the county where the court is held, to represent him therein, and shall cause the letter of appointment to be filed in the office of the clerk of the court in which the estate is administered, where it shall have the same effect as a demand for notice of an order or filing concerning the decedent's estate, all process issued from the court touching the estate may be executed on such attorney, and, when so executed, shall have the same force and effect as if executed on the principal in person.

§ 87-3-7

(1) A letter of attorney to transact any business need only express plainly the authority conferred.

(2) If any power of attorney or other writing (a) authorizes an attorney-in-fact or other agent to do, execute or perform any act that the principal might or could do, or (b) evidences the principal's intent to give the attorney-in-fact or agent full power to handle the principal's affairs or deal with the principal's property, the attorney-in-fact or agent shall have the power and authority to make gifts in any amount of any of the principal's property to any individuals or to any organizations described in Sections 170(c) and 2522(a) of the Internal Revenue Code or corresponding future provisions of federal tax law, or both, in accordance with the principal's personal history of making or joining in the making of lifetime gifts, including the authority to exercise all rights and powers granted to a fiduciary under the Revised Uniform Fiduciary Access to Digital Assets Act created under Chapter 23, Title 91.

(3) Subsection (2) as set forth above is declaratory of past and present law in the State of Mississippi, and shall be applied to all powers of attorney, whether executed before, on or after March 16, 1999.

§ 87-3-9

“Know all, that I, George Poindexter, of __________ county, Mississippi, do hereby appoint Albert Brown, of __________ county, my attorney in fact, with full power to sell and convey in fee simple, with general warranty [or without warranty, as the case may be] of title, that land situated in [describe it].

“Witness my signature, the __________ of __________, A. D. __________.

“George Poindexter.”

§ 87-3-11

“Know all, that I, C. C. Claiborne, of __________ county, Mississippi, do hereby constitute Gerard C. Brandon, of __________ county, in said state, my attorney in fact to represent me in the chancery court of said county of __________, in all matters pertaining to the administration in said court of the estate of Phoebe Jones, in which I am interested as an heir and distributee; and I consent that all process issued from said court touching said estate may be executed on my said attorney.

“Witness my signature, the ___ day of __________, A.D. __________.

“C. C. Claiborne.”

§ 87-3-15

The death of the principal shall not operate a revocation of an agency created by him, other than by writing, as to one who, without notice of such death, in good faith and under circumstances repelling the imputation to him of fraud or negligence, deals with such agent.

§ 87-3-17

Any writing revoking letters of attorney may, when acknowledged or proved as conveyances of land are required to be acknowledged or proved, be recorded in like manner, and with like effect from the time of being filed for record, in the office in which the letters revoked were recorded.

§ 87-3-101

Sections 87-3-101 through 87-3-113 may be cited as the “Uniform Durable Power of Attorney Act.”

§ 87-3-103

Sections 87-3-101 through 87-3-113 shall be applied and construed to effectuate their general purpose to make uniform the law with respect to the subject of these sections among states enacting the Uniform Durable Power of Attorney Act.

§ 87-3-105

A durable power of attorney is a power of attorney by which a principal designates another his attorney in fact in writing and the writing contains the words “This power of attorney shall not be affected by subsequent disability or incapacity of the principal, or lapse of time,” or “This power of attorney shall become effective upon the disability or incapacity of the principal,” or similar words showing the intent of the principal that the authority conferred shall be exercisable notwithstanding the principal's subsequent disability or incapacity, and, unless it states a time of termination, notwithstanding the lapse of time since the execution of the instrument.

§ 87-3-107

All acts done by an attorney in fact pursuant to a durable power of attorney during any period of disability or incapacity of the principal have the same effect and inure to the benefit of and bind the principal and his successors in interest as if the principal were competent and not disabled. Unless the instrument states a time of termination, the power is exercisable notwithstanding the lapse of time since the execution of the instrument.

§ 87-3-109

(1) If, following execution of a durable power of attorney, a court of the principal's domicile appoints a conservator, guardian of the estate, or other fiduciary charged with the management of all of the principal's property or all of his property except specified exclusions, the attorney in fact is accountable to the fiduciary as well as to the principal. The fiduciary has the same power to revoke or amend the power of attorney that the principal would have had if he were not disabled or incapacitated.

(2) A principal may nominate, by a durable power of attorney, the conservator, guardian of his estate, or guardian of his person for consideration by the court if protective proceedings for the principal's person or estate are thereafter commenced. The court shall make its appointment in accordance with the principal's most recent nomination in a durable power of attorney except for good cause or disqualification.

(3) Any person acting in a fiduciary capacity shall exercise all rights and powers granted to a fiduciary under the Revised Uniform Fiduciary Access to Digital Assets Act created under Chapter 23, Title 91.

§ 87-3-111

(1) The death of a principal who has executed a written power of attorney, durable or otherwise, does not revoke or terminate the agency as to the attorney in fact or other person, who, without actual knowledge of the death of the principal, acts in good faith under the power. Any action so taken, unless otherwise invalid or unenforceable, binds successors in interest of the principal.

(2) The disability or incapacity of a principal who has previously executed a written power of attorney that is not a durable power does not revoke or terminate the agency as to the attorney in fact or other person, who, without actual knowledge of the disability or incapacity of the principal, acts in good faith under the power. Any action so taken, unless otherwise invalid or unenforceable, binds the principal and his successors in interest.

§ 87-3-113

As to acts undertaken in good faith reliance thereon, an affidavit executed by the attorney in fact under a power of attorney, durable or otherwise, stating that he did not have at the time of exercise of the power actual knowledge of the termination of the power by revocation or of the principal's death, disability, or incapacity is conclusive proof of the nonrevocation or nontermination of the power at that time. If the exercise of the power of attorney requires execution and delivery of any instrument that is recordable, the affidavit when authenticated for record is likewise recordable. This section does not affect any provision in a power of attorney for its termination by expiration of time or occurrence of an event other than express revocation or a change in the principal's capacity.

Chapter 5 Principal and Surety

§ 87-5-1

Any person bound as surety or accommodation indorser for another, may, at any time after the debt has become due or liability been incurred, give notice in writing to the creditor to commence and prosecute legal proceedings against the principal debtor, if living and resident within this state, for the recovery of the debt; and if the creditor fails to commence legal proceedings by the next term of the court in which the same shall be instituted, to be held after the expiration of thirty days (30 days) from the giving of the notice, and to prosecute the same to effect, the surety who shall have given the notice shall be discharged from liability. It shall not be lawful to plead or to give in evidence under this section a notice not in writing, and any act of the creditor shall not be a waiver of notice in writing as herein required.

§ 87-5-3

When any person who is bound as surety or indorser for another on any writing, for the payment of money or other thing, which shall remain unpaid, in whole or in part, by the principal debtor, after the maturity thereof, shall pay or tender to the creditor or holder of such writing the amount due thereon, the creditor or holder shall assign such writing to the surety or indorser paying or tendering the money or other thing due; and such assignee may have an action in his own name against the principal debtor upon the writing, to recover the amount paid in satisfaction of it.

§ 87-5-5

When any surety or guaranty company has executed any bond or other contract as surety for any person, company or corporation, guaranteeing the performance of any duty or the payment of any money, and such person, company or corporation make default therein and said surety or guaranty company pays the amount for which the party insured or guaranteed is legally liable, the said surety or guaranty company becomes thereby subrogated to all the rights of the party in whose favor the security or guaranty is given, and such company may have and maintain an action against the principal in its own name to recover the amount paid out in satisfaction thereof.

§ 87-5-7

A surety or indorser shall not suffer judgment or a decree to be rendered against him by confession or default, without the consent of the principal debtor. And a surety or indorser who shall be sued alone, shall give notice of the suit to the principal debtor, if resident in this state, and if he have knowledge or information of any defense to the action which the principal debtor has, he shall make such defense; and if a surety or indorser, when sued alone, fail to give such notice to the principal debtor, in case he be a resident of this state, or to make such defense in the action of which he has knowledge or information, he shall be barred of all recovery against the principal debtor in case the principal debtor have at the time a good defense to the action of the creditor.

§ 87-5-9

If a judgment or decree be rendered by any court against a principal debtor and his surety, or against his sureties, and one or more of his sureties shall pay and satisfy the judgment or decree, the same shall, by operation of law, be thereby transferred and assigned to the surety or sureties paying and satisfying it, who shall have all the liens and equities of such judgment or decree and of the debt or claim on which the same is founded, which the creditor therein had. The surety, on making affidavit of his suretyship, and of his having paid the judgment or decree, and filing the affidavit and any evidence of such payment that he may hold, with the officer authorized to issue execution on the judgment or decree to whom he may apply for execution, shall be entitled to have execution issued on the judgment or decree, in the name of the plaintiff or complainant against the defendants therein, as if the judgment or decree had not been paid and satisfied. The officer issuing the execution shall indorse thereon that it is issued for the use of the surety who paid the judgment or decree; and the officer serving it shall collect the money, for the use of the surety, from the principal debtor, if he be a party to the judgment or decree and the money can be made out of him; and, if not, he shall collect a ratable proportion of the money from each of the co-sureties.

§ 87-5-11

If such judgment or decree as is referred to in Section 87-5-9 shall appear to be satisfied, either on the judgment-roll, execution docket, or other record, property conveyed or encumbered thereafter by the principal debtor or sureties to any one for a valuable consideration, without notice of the fact that it was paid and satisfied by a surety, shall not be liable to such judgment or decree, unless at the time the property was conveyed or encumbranced, the record which showed the satisfaction of the judgment or decree, shall also show the fact that it was paid and satisfied by a surety, and the name of such surety.

§ 87-5-13

When execution shall issue on any judgment or decree rendered against a principal and surety, and the surety shall make affidavit that he is only surety on the instrument upon which the judgment or decree is founded, and deliver it to the officer serving the execution, the officer shall make the money, or as much thereof as possible, out of the property of the principal debtor, if he have any in the county to which the execution is issued subject to execution; and the officer shall return the affidavit with the execution.

Chapter 7 Improvements to Real Property

§ 87-7-3

All sums due contractors under all construction contracts, except public construction contracts, shall be paid as follows:

(a) Partial, progress or interim payments: all partial, progress or interim payments or monies owed contractors shall be paid when due and payable under the terms of the contract. If they are not paid within thirty (30) calendar days from the day they were due and payable, then they shall bear interest from the due date at the rate of one percent (1%) per month until fully paid.

(b) Final payments: The final payment of all monies owed contractors shall be due and payable:

(i) At the completion of the project or after the work has been substantially completed in accordance with the terms and provisions of the contract;

(ii) When the owner beneficially uses or occupies the project except in the case where the project involves renovation or alteration to an existing facility in which the owner maintains beneficial use or occupancy during the course of the project; or

(iii) When the project is certified as having been completed by the architect or engineer authorized to make such certification, whichever event shall first occur.

If the contractor is not paid in full within thirty (30) calendar days from the first occurrence of one (1) of the above-mentioned events, then the final payment shall bear interest from the date of such first occurrence at the rate of one percent (1%) per month until fully paid.

In no event shall the final payment due the contractor be made until the consent of the contractor's surety has been obtained in writing and delivered to the proper contracting authority.

§ 87-7-5

When a contractor receives any payment from the owner under a construction contract, other than a public construction contract, the contractor shall, upon receipt of that payment, pay each subcontractor and material supplier in proportion to the percentage of work completed by each such subcontractor and material supplier. If for any reason the contractor receives less than the full payment due from the owner, the contractor shall be obligated to disburse on a pro rata basis those funds received, with the contractor, subcontractors and material suppliers each receiving a prorated portion based on the amount due on the payment. If the contractor without reasonable cause fails to make any payment to his subcontractors and material suppliers within fifteen (15) days after the receipt of payment from the owner under the construction contract, the contractor shall pay to his subcontractors and material suppliers, in addition to the payment due them, a penalty in the amount of one-half of one percent ( 1/2 of 1%) per day of the delinquency, calculated from the expiration of the fifteen-day period until fully paid. The total penalty shall not exceed fifteen percent (15%) of the outstanding balance due. The provisions of this section shall not be applicable to contracts for the construction of single-family dwellings.

§ 87-7-7

(1) A contractor who undertakes to negotiate a draft made payable to the contractor and any other party must first obtain an endorsement or other written signed authorization of every co-payee on the draft if the draft is tendered in payment for materials or equipment furnished or labor performed by the owner, laborer, supplier or equipment dealer.

(2) A contractor who negotiates a draft without first obtaining an endorsement or other written signed authorization required under this section is guilty of a misdemeanor and shall be subject to a fine not to exceed Five Hundred Dollars ($500.00) per violation, and shall also be ordered by the court to make full restitution to the owner, laborer, supplier or equipment dealer who is entitled to payment from the proceeds of the draft, as well as reasonable attorney's fees incurred by any party to whom restitution is ordered.

§ 87-7-9

(1) A provision in any contract, subcontract, or purchase order for the improvement of real property in this state, or to provide materials therefor, is void and against public policy if it makes the contract, subcontract, or purchase order subject to the laws of another state, or provides that the exclusive forum for any litigation, arbitration, or other dispute resolution process be located in another state.

(2) The provisions of this section apply only to contracts, agreements and purchase orders:

(a) Entered into on or after July 1, 2018;

(b) Only if at least one (1) of the parties is a Mississippi resident; and

(c) Only if entered into between any two (2) or more of the following persons and no others: the owner of the real property improved or to be improved, a contractor, subcontractor, materialman or design professional. As used in this section, “contractor”, “subcontractor”, “materialman” and “design professional” shall have the meanings ascribed in Section 85-7-401.

(3) For purposes of this section, “Mississippi resident” means any natural person domiciled in Mississippi or any business entity having a principal place of business in Mississippi.

Chapter 9 General Provisions

§ 87-9-1

(1) When a contract calls for one (1) party to reimburse the other party for the federal manufacturer's excise tax levied by 26 USCA 4081 through 26 USCA 4083, whether as a separate item or as part of the price, the party required to make the reimbursement may tender payment for the taxes one (1) business day before the time that the other party is required to remit the taxes to the United States Internal Revenue Service.

(2) If a party elects to make payment as provided in subsection (1) of this section, the other party may demand security for the payment of the taxes in proportion to the amount the taxes represent compared to the security demanded on the contract as a whole. The other party may not change the other payment terms of the contract without a valid business reason other than the exercise of the option as provided in subsection (1) of this section, except to require the payment of the taxes under the option to be made by electronic transfer of funds.

(3) The party exercising the option set out in subsection (1) of this section shall notify the other party in writing of the intent to exercise the payment option and the effective date of the exercise which shall not be earlier than thirty (30) days after the notice of intent is received or the beginning of the next federal tax quarter, whichever is later.

(4) This section shall apply to all contracts now in effect which have no expiration date and are continuing contracts and to all other contracts entered into or renewed from and after July 1, 1994. Specifically, this section shall apply to contracts arising from daily wholesale price offers which are accepted or rejected by the acceptance or rejection of products at the stated prices. Each daily price offering shall be construed to be a new offer and each purchase of product at a given price offer to create a new contract to which this section shall apply. Any contract in force and effect on July 1, 1994, which, by its own terms, will terminate on a subsequent date, shall be governed by the law as it existed before July 1, 1994.

(5) The option provided for in subsection (1) of this section shall not be construed to impair the obligations arising under any contract executed before July 1, 1994. The exercise of an option as set out in subsection (1) of this section shall not relieve the party of the obligation to make the reimbursement as provided for in the contract but shall affect only the timing of when that reimbursement shall be tendered.

§ 87-9-3

(1) For the purposes of this section, the following words and phrases shall have the meanings ascribed in this section unless the context clearly indicates otherwise:

(a) “Retainage” means that money, or other security as agreed to by the parties to a construction contract, earned by the contractor, subcontractor or lower-tier sub-subcontractor or supplier, as the case may be, for work properly performed or materials suitably stored if payment for stored materials is provided for in the contract, which has been retained by the owner conditioned on final completion and acceptance of all work in connection with a project or projects by the contractor, subcontractor or lower-tier sub-subcontractor or supplier.

(b) “Final completion” shall mean the stage of the project at which all work has been completed in accordance with the contract requirements, including, but not limited to, the completion of punch list items, the submission of contractual close-out documents, equipment manuals, warranty documents or other like required deliverables.

(2)(a) A construction contract on any project in this state which provides for progress payments in installments based upon an estimated percentage of completion with a percentage of the contract proceeds to be retained by the owner pending final completion of the contract may provide for the owner's withholding of retainage from payments to its contractor for work performed by that contractor on a construction project. However, there may not be retained more than five percent (5%) of the estimated amount of work properly done and the value of materials stored on the site or suitably stored and insured off-site. If an owner withholds an amount greater than that allowed by this paragraph (a), the owner shall be liable to the contractor for interest accruing on the excess amount withheld at the rate of one percent (1%) per month.

(b) A construction contract on any project in this state which provides for progress payments in installments based upon an estimated percentage of completion with a percentage of the contract proceeds to be retained by the contractor pending final completion of the contract may provide for the contractor's withholding of retainage from payments to its subcontractors for work performed by the subcontractors on a construction project. However, there may not be retained more than five percent (5%) of the estimated amount of work properly done and the value of materials stored on the site or suitably stored and insured off-site. If a contractor withholds an amount greater than that allowed by this paragraph (b), the contractor shall be liable to the subcontractor for interest accruing on the excess amount withheld at the rate of one percent (1%) per month.

(c) A construction contract on any project in this state which provides for progress payments in installments based upon an estimated percentage of completion with a percentage of the contract proceeds to be retained by the subcontractor pending final completion of the contract may provide for the subcontractor's withholding of retainage from payments to its sub-subcontractors or material suppliers for work performed by such sub-subcontractors or material suppliers on a construction project. However, there may not be retained more than five percent (5%) of the estimated amount of work properly done and the value of materials stored on the site or suitably stored and insured off-site. If a subcontractor withholds an amount greater than that allowed by this paragraph (c), the subcontractor shall be liable to the sub-subcontractor or material supplier for interest accruing on the excess amount withheld at the rate of one percent (1%) per month.

(d) The five percent (5%) retainage described in paragraphs (a), (b) and (c) of this subsection shall apply to all items of work required to achieve final completion. Any amounts held above the five percent (5%) for items of work required to achieve final completion shall be subject to interest accruing on the excess amount at the rate of one percent (1%) per month.

(3) The owner shall release and pay retainage to the contractor for work completed on any construction contract no later than sixty (60) days after the final completion of the contractor's work provided all necessary certificates of occupancy have been issued. The contractor shall release and pay retainage to its subcontractors and subcontractors shall release and pay retainage to their sub-subcontractors for work completed pursuant to the requirements of Section 87-7-5, Mississippi Code of 1972.

(4) Nothing in this section limits or alters the paying party's right to withhold or not approve payment on grounds set forth in the party's contract, subcontract or sub-subcontract for work not properly performed or payment not earned; rather, this section is intended only to establish a maximum amount of retainage and provide for the payment of interest for improperly held retainage. Also, the paying party may condition payment on the receipt of payment from the party with whom the paying party contracted and a full release of any lien of the contractor, subcontractor or sub-subcontractor, as the case may be, for the amount of work being paid. For purposes of this subsection (4), “the paying party” shall mean the party in direct contractual privity with the party asserting that payment is due to it and, accordingly, shall not include any financial institution or other lender that is the source of the funds at issue.

(5) A party may not waive by contract or otherwise the right to receive interest, as provided for in this section.

(6) A contractor, subcontractor or sub-subcontractor may file a civil action solely against the party contractually obligated for the payment of the amount claimed to recover the amount due plus the interest accrued in accordance with this section. If the court finds in the civil action that the party contractually obligated for the payment of the amount claimed has not made payment in compliance with this section, the court shall award the interest specified in this section in addition to the amount due. In any such civil action, the party in whose favor a judgement is rendered shall be entitled to recover payment of reasonable attorneys' fees, court costs and reasonable expenses from the other party. For purposes of this subsection (6), “the party contractually obligated for the payment” shall mean the party in direct contractual privity with the party asserting that payment is due to it and, accordingly, shall not include any financial institution or other lender that is the source of the funds at issue.

(7) This section does not apply to the following:

(a) Residential homebuilding.

(b) Improvements to real property intended for residential purposes which consist of sixteen (16) or fewer residential units.

(c) Contracts, subcontracts or sub-subcontracts in the amount of Ten Thousand Dollars ($10,000.00) or less.

(d) Contracts awarded by the State of Mississippi, or any agency, unit or department of the State of Mississippi, or by any political subdivision thereof.

(8) This section does not amend or modify existing laws relating to mechanics and materialmen liens provided in Article 21, Title 85, Chapter 7, Mississippi Code of 1972.

(9) The rights and obligations created in this section cannot be modified or waived by any oral or written contract or agreement.

(10) The provisions of this section shall become effective for and apply to all contracts, as described in this section, entered into on or after July 1, 2024.