SECTION 1. Title 6 of the General Laws entitled "Commercial Law - General Regulatory Provisions" is hereby amended by adding thereto the following chapter:

CHAPTER 34.1
LAW APPLICABLE TO CONSTRUCTION CONTRACTS

6-34.1-1. Law applicable to construction contracts. -- (a) If a contract is principally for the construction or repair of improvements to real property located in Rhode Island and the contract contains a provision that makes the contract or any conflict arising under it subject to the law of another state, to litigation in the courts of another state, or to arbitration in another state, that provision is voidable by the party that is obligated by the contract to perform the construction or repair.

(b) A contract is principally for the construction or repair of improvements to real property located in Rhode Island if the contract obligates a party, as its principal obligation under the contract, to provide labor, or labor and materials, for the construction or repair of improvements to real property located in Rhode Island as a general contractor or subcontractor.

(c) A contract is not principally for the construction or repair of improvements to real property located in Rhode Island if:

(1) the contract is a partnership agreement or other agreement governing an entity or trust;

(2) the contract provides for a loan or other extension of credit and the party promising to construct or repair improvements does so as part of its agreements with the lender or other extender of credit; or

(3) the contract is for the management of real property or improvements and the obligation to construct or repair is part of that management.

(d) Subsections (b) and (c) of this section are not an exclusive list of situations in which a contract is or is not principally for the construction or repair of improvements to real property located in this state.

SECTION 2. This act shall take effect upon passage.