HBA-ATS H.B. 2198 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2198
By: Chisum
Business & Industry
3/24/1999
Introduced



BACKGROUND AND PURPOSE 

In Texas, organizations that wish to transact business in the state must
satisfy certain requirements before they may begin conducting business
operations.  Despite these safeguards, some entities that are organized
outside Texas transact business in the state without meeting the
requirements domestic organizations must satisfy.  These foreign businesses
may then seek enforcement of their contracts and protection for their goods
and services in Texas courts even if the contracts or goods are contrary to
the laws of the state. 

H.B. 2198 prohibits the enforcement in this state of a contract for goods
or services entered into in another state if providing the goods or
services would violate the law or is against the public policy of this
state. It also prohibits a professional association that is established
under the laws of another state from doing business in this state or being
recognized in this state if the requirements for the formation of the
association in the other state are not substantially similar to the
requirements for the formation of an association in this state. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter D, Chapter 35, Business & Commerce Code, by
adding Section 35.49, as follows: 

Sec. 35.49.  PROHIBITED OUT-OF-STATE CONTRACTS.  Prohibits the enforcement
in this state of a contract for goods or services entered into in another
state if providing the goods or services would violate the law or is
against the public policy of this state.  Prohibits the enforcement in this
state of a judgment that arises under a contract for goods or services that
is unenforceable under this section. 

SECTION 2.  Amends Article 1528f, V.T.C.S. (Texas Professional Association
Act), by adding Section 27, as follows: 

Sec. 27.  CERTAIN PROHIBITED OUT-OF-STATE PROFESSIONAL ASSOCIATIONS.
Prohibits a professional association that is established under the laws of
another state from doing business in this state or being recognized in this
state if the requirements for the formation of the association in the other
state are not substantially similar to the requirements for the formation
of an association in this state. 

SECTION 3.  Amends Article 1396-1.01 et seq., V.T.C.S. (Texas Non-Profit
Corporation Act), by adding Article 2.01A, as follows: 

Art. 2.01A.  CERTAIN PROHIBITED OUT-OF-STATE CORPORATIONS.  Prohibits a
non-profit corporation, including a charitable non-business entity, that is
formed under the laws of another state from operating in this state if the
non-profit corporation is formed by members ineligible to form a non-profit
corporation in this state, or if the purpose for which  the non-profit
corporation was formed is illegal or against the public policy of this
state. 

SECTION 4.  Effective date: September 1, 1999.

SECTION 5.  Emergency clause.