75R11782 DWS-D                           

         By Elkins                                              H.B. No. 306

         Substitute the following for H.B. No. 306:

         By Elkins                                          C.S.H.B. No. 306

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the law that applies to activities conducted over the

 1-3     Internet.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Chapter 35, Business & Commerce Code, is amended

 1-6     by adding Subchapter I to read as follows:

 1-7                     SUBCHAPTER I.  INTERNET ACTIVITIES

 1-8           Sec. 35.961.  DEFINITION.  In this subchapter, "Internet"

 1-9     means the largest nonproprietary nonprofit cooperative public

1-10     computer network, popularly known as the Internet.

1-11           Sec. 35.962.  LAW APPLICABLE TO CONTRACT MADE OVER INTERNET.

1-12     (a) Subject to Subsection (d), this section applies only to a

1-13     contract made solely over  the Internet between  a person located

1-14     in this state and a person located outside this state who does not

1-15     maintain an office or agent in this state for doing business in

1-16     this state.

1-17           (b)  A contract to which this section applies is governed by

1-18     the law of this state unless each party to the contract who is

1-19     located in this state:

1-20                 (1)  is given notice that the law of the state in which

1-21     another party to the contract is located applies to the contract;

1-22     and

1-23                 (2)  agrees to the application of that state's law.

1-24           (c)  A person asserting that the law of another state applies

 2-1     to a contract has the burden of proving that notice was given and

 2-2     agreement was obtained as provided by Subsection (b).

 2-3           (d)  Sections 1.105 and 35.53 do not apply to a contract to

 2-4     which this section applies.  This section does not apply to a

 2-5     contract to which Section 35.51 applies.

 2-6           Sec. 35.963.  RECIPROCAL SUSPENSION OF STATE LAWS.  Except as

 2-7     provided by Section 35.962, if a person in another state transmits

 2-8     information into this state over the Internet or conducts an

 2-9     activity over the Internet in this state and the transmission or

2-10     activity would violate a law of this state, the activity does not

2-11     violate the law of this state if:

2-12                 (1)  the activity is legal in the state in which the

2-13     person is located; and

2-14                 (2)  that other state provides for a reciprocal

2-15     recognition of the laws of this state in relation to information

2-16     transmitted or activities conducted over the Internet by a person

2-17     located in this state.

2-18           SECTION 2.  Subchapter I, Chapter 35, Business & Commerce

2-19     Code, as added by this Act, applies only to a contract made or

2-20     transmission or activity occurring on or after the effective date

2-21     of this Act.

2-22           SECTION 3.  This Act takes effect September 1, 1997.

2-23           SECTION 4.  The importance of this legislation and the

2-24     crowded condition of the calendars in both houses create an

2-25     emergency and an imperative public necessity that the

2-26     constitutional rule requiring bills to be read on three several

2-27     days in each house be suspended, and this rule is hereby suspended.