SRC-CDH H.B. 2506 75(R)   BILL ANALYSIS


Senate Research Center   H.B. 2506
By: Dukes (Ellis)
Jurisprudence
5-13-97
Engrossed


DIGEST 

Currently, contractors and subcontractors providing goods or services to
local governments are entitled by statute to interest on overdue payments
owed by the subdivision.  However, local governments often enjoy disparate
bargaining power over vendors and may use this leverage to require a
contractual waiver of the vendor's statutory right to interest.  H.B. 2506
precludes vendors from contractually waiving their right to interest on
overdue payments owned by political subdivisions.  By removing interest on
overdue payments as a negotiable point in the contract, contractors and
subcontractors are protected from having to surrender this right in order
to secure the business of the local government.   

PURPOSE

As proposed, H.B. 2506 establishes provisions regarding interest charged
on late payment made by certain political subdivisions under a contract
for goods or services. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 2251.027, Government Code, by adding Subsection
(e), to prohibit a political subdivision from requiring a vendor or
subcontractor to agree to waive the vendor's or subcontractor's right to
interest under this chapter as a condition of the contract between the
parties. 

SECTION 2. Makes application of this Act prospective.

SECTION 3. Emergency clause.  
  Effective date:  90 days after adjournment.