HBA-EDN C.S.H.B. 539 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 539 By: Thompson Judicial Affairs 3/30/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE Under current law, a parent or guardian is required to seek court approval when a minor is entering into certain contracts. However, there are no specific laws relating to the establishment of a contract for the services of a child performer or to issues of liability accompanying that contract. C.S.H.B. 539 establishes provisions to specifically address arts, entertainment, advertisement, and sports contracts entered into by minors. 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. ANALYSIS C.S.H.B. 539 amends the Texas Probate Code to authorize a court, on petition of the guardian of the estate of the minor, to enter an order approving an arts and entertainment contract, advertisement contract, or sports contract (contract) that is entered into by a minor. The bill authorizes the court to approve the contract only after the guardian of the minor's estate provides to the other party to the contract notice of the petition and an opportunity to request a hearing in the manner provided by the court. Each parent of the minor is a necessary party to such a proceeding. The bill authorizes the court to appoint a guardian ad litem for a minor who has entered into a contract if the court finds that appointment of the ad litem would be in the best interest of the minor. C.S.H.B. 539 provides that the approval of a contract that is entered into by a minor extends to the contract as a whole and any of the terms and provisions of the contract, including any optional or conditional provision in the contract relating to the extension or termination of its term. The bill prohibits an otherwise valid contract that was approved by the court from being voidable solely on the ground that it was entered into by a person during the age of minority. C.S.H.B. 539 authorizes the court, notwithstanding any other law, to require in an order approving a contract that a reasonable amount of the net earnings of the minor under the contract, as determined by the court, be set aside and preserved for the benefit of the minor in a management trust or a similar trust created under the laws of another state. The bill authorizes a court to withhold approval of a contract under which part of the minor's net earnings under the contract will be set aside in a trust until the guardian of the minor's estate executes and files with the court written consent to the making of the order. C.S.H.B. 539 prohibits these provisions from being construed to authorize the making of a contract that binds a minor beyond the seventh anniversary of the date of the contract. EFFECTIVE DATE September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 539 modifies the original by authorizing a court to enter an order approving a contract that is entered into by a minor on petition of the guardian of the minor's estate, rather than on petition of a party to the contract. The substitute authorizes a court to approve a contract only after the guardian of the minor's estate has provided notice of the petition to the other party to the contract. The substitute removes language referring to a court-appointed managing conservator or guardian of a minor as a necessary party to a proceeding and to the county in which a proceeding may be brought. The original prohibits the bill from being construed to authorize the making of a contract that binds a minor beyond the earlier of the minor's 18th birthday or the date on which the minor's disabilities of minority are removed. The substitute changes this provision to beyond the seventh anniversary of the date of the contract.