79R7448 HLT-F

By:  Raymond                                                      H.B. No. 3066



A BILL TO BE ENTITLED

AN ACT

relating to unconscionable contract provisions.                               
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter D, Chapter 35, Business & Commerce 
Code, is amended by adding Section 35.62 to read as follows:
	Sec. 35.62.  UNCONSCIONABLE CONTRACT PROVISIONS.  (a)  
Except as provided by Subsection (e), an unconscionable contract 
provision is unenforceable.
	(b)  This section applies to procedurally and substantively 
unconscionable contract provisions.
	(c)  A contract provision is unconscionable if it takes 
advantage of a party's lack of knowledge, ability, experience, or 
capacity to the degree that the provision is substantially unfair.  
A provision is substantially unfair if it is:
		(1)  part of a sale or lease of goods or services and is 
not made known to the purchaser until after the seller has been paid 
or the goods or services have been delivered;
		(2)  a preprinted provision that was not subject to 
negotiation and deprives a party of a fundamental right under state 
or federal law; or
		(3)  so one-sided as to offend fundamental notions of 
justice and fair play.
	(d)  Only a court of record may make a determination of 
whether a contract provision is unconscionable.
	(e)  An unconscionable contract provision is enforceable 
only if:     
		(1)  it is in writing;                                                 
		(2)  the party asserting that the contract is 
unconscionable was represented by an attorney in the negotiation or 
signing of the contract; and
		(3)  the party against whom the assertion of 
unconscionability is made did not directly or indirectly suggest, 
identify, or select the attorney.
	(f)  A court that finds a contract provision unconscionable 
may grant declaratory relief with regard to that provision but 
shall enforce the remainder of the contract without the 
unconscionable provision unless doing so would cause the contract 
to fail in its essential purpose.  If the court finds that the 
contract would fail in its essential purpose, the court may order 
rescission of the contract to restore the parties to the positions 
that they would have been in had the contract not been executed.
	SECTION 2.  This Act takes effect immediately if it receives 
a vote of two-thirds of all the members elected to each house, as 
provided by Section 39, Article III, Texas Constitution.  If this 
Act does not receive the vote necessary for immediate effect, this 
Act takes effect September 1, 2005.