Texas Business & Commerce Code
§ 56.054 — ENFORCEMENT OF CLAUSE PROHIBITED IF UNCONSCIONABLE
BC § 56.054Title 4. BUSINESS OPPORTUNITIES AND AGREEMENTS · Ch. 56. AGREEMENT FOR PAYMENT OF CONSTRUCTION SUBCONTRACTOR · Art. B. CONTINGENT PAYMENT CLAUSE
Statute text
View on source(a)A contingent payor or its surety may not enforce a contingent payment clause if the enforcement would be unconscionable. The party asserting that a contingent payment clause is unconscionable has the burden of proving that the clause is unconscionable.
(b)The enforcement of a contingent payment clause is not unconscionable if the contingent payor:
(1)proves that the contingent payor has exercised diligence in ascertaining and communicating in writing to the contingent payee, before the contract in which the contingent payment clause has been asserted becomes enforceable against the contingent payee, the financial viability of the primary obligor and the existence of adequate financial arrangements to pay for the improvements; and
(2)has done the following:
(A)made reasonable efforts to collect the amount owed to the contingent payor; or
(B)made or offered to make, at a reasonable time, an assignment by the contingent payor to the contingent payee of a cause of action against the obligor for the amounts owed to the contingent payee by the contingent payor and offered reasonable cooperation to the contingent payee's collection efforts, if the assigned cause of action is not subject to defenses caused by the contingent payor's action or failure to act.
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Legislative history
Added by Acts 2009, 81st Leg., R.S., Ch. 87 (S.B. 1969), Sec. 4.001(a), eff. September 1, 2009.