BILL ANALYSIS C.S.S.B. 1381 By: Wentworth Jurisprudence 4-20-95 Committee Report (Substituted) BACKGROUND At one time Texas arbitration law contained a provision that allowed an arbitration clause in a contract only if the contract contained a warning concerning the arbitration clause. When this warning was removed, a provision was added which rendered void an arbitration clause in a transaction of less than $50,000. The bracket was inserted in order to preserve a consumer's right to have the person's day in court should a dispute arise. This provision, however, may lead to an increase in full-blown litigation, rather than increasing the efficiency of the dispute resolution process. PURPOSE As proposed, C.S.S.B. 1381 deletes a provision that holds certain arbitration agreements invalid in a transaction of less than $50,000. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 224, V.T.C.S., to delete a provision providing that the Validity of Arbitrations Agreement Act does not apply to any contract for the acquisition by a person (as distinguished from a legal entity) of real or person property, or services, or money or credit where the total consideration to be paid or furnished by the individual is $50,000 or less, unless the individual and the other parties agree in writing to submit to arbitration and such agreement is signed by all parties and their attorneys. Makes conforming changes. SECTION 2. Effective date: September 1, 1995. Makes application of this Act prospective. SECTION 3. Emergency clause.