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Signed Into Law
Signed June 20, 2025Effective 2025-06-20
HB2960

Regular Session

Relating to choice of law and venue for certain construction contracts.

Government Affairs & Regulatory Compliance Analysis

HB2960: Government Affairs Overview

Effective September 1, 2025, HB2960 removes the "voidable" status of out-of-state venue and choice-of-law clauses in construction contracts, rendering them void ab initio (automatically invalid). This legislation mandates that all disputes arising from construction projects in Texas must be litigated in the specific Texas county where the real property is located, affecting all contractors, subcontractors, and suppliers regardless of their corporate headquarters.

Rep. Richard Hayes·House Bill·Regular Session

Critical
Low Cost
Effective:2025-06-20
Business Impact

Who HB2960 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: critical

Significant regulatory changes (effective 2025-06-20). Review with your legal and compliance teams to understand implications.

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Manufacturing & Business

Affected business types:

  • Manufacturers
  • Industrial facilities
  • Supply chain companies
  • Logistics providers
View all manufacturing & business legislation

Key Operational Considerations

  • 1Choice of Law: Remove any clauses applying the laws of another state (e.g., Delaware or New York) to Texas projects; these are now void.
  • 2Sales & Project Management Training: Staff must be trained that venue is legally tied to the physical project site. They cannot negotiate venue as a deal point.

Estimated Cost Impact

lowMinimal cost impact anticipated.

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HB2960
Relating to choice of law and venue for certain construction contracts.
Critical Urgency
Unanimous Passage
House Vote148 - 0
YEA
100% in favor148 voting
Senate Vote31 - 0
YEA
100% in favor31 voting
Cost Impact
Low
Effective
2025-06-20
Primary Author: Rep. Richard Hayes
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: September 1, 2025
  • Compliance Deadline: August 31, 2025 (All contract templates must be updated prior to this date to ensure any agreement signed or renewed on September 1 is compliant).
  • Agency Rulemaking: None. This statute is self-executing and enforced by the Texas judicial system. There will be no regulatory guidance period; the courts will interpret the law immediately upon the first challenge.

Immediate Action Plan

  • Immediate: Issue a directive to legal and procurement teams to stop accepting out-of-state venue clauses in new negotiations, even before the effective date, to establish consistency.
  • By July 1, 2025: Audit all "evergreen" or auto-renewing contracts to identify those scheduled to renew after September 1; renegotiate terms or terminate non-compliant agreements.
  • By August 1, 2025: Finalize and distribute new "Texas Project" contract templates containing the mandatory venue language: *"Venue for any action arising out of this contract shall be in the county in which the property is located, pursuant to Tex. Bus. & Com. Code § 272.001(c)."*
  • By September 1, 2025: Confirm all legacy templates have been deleted from company servers.

Operational Changes Required

Contracts

  • Template Overhaul: You must retire all contract templates that designate a specific venue (e.g., "Harris County") or a specific arbitration hub if you work in multiple counties. Replace with dynamic language citing "the county in which the project is located."
  • MSA Review: Audit all Master Service Agreements (MSAs) with national vendors. Any MSA renewed on or after September 1, 2025, will have its venue provisions invalidated if they require litigation outside Texas.
  • Choice of Law: Remove any clauses applying the laws of another state (e.g., Delaware or New York) to Texas projects; these are now void.

Hiring/Training

  • Sales & Project Management Training: Staff must be trained that venue is legally tied to the physical project site. They cannot negotiate venue as a deal point.
  • Legal/Procurement: In-house teams must be instructed to automatically strike out-of-state venue clauses in inbound vendor contracts without need for escalation.

Reporting & Record-Keeping

  • Contract Version Control: Implement a strict "Post-HB2960" repository. Ensure no pre-September 2025 templates are accessible to project managers.
  • Project File Documentation: The specific county of the job site must be identified and recorded at project intake to establish the mandatory legal venue.

Fees & Costs

  • Litigation Costs: While there are no new government fees, anticipate increased legal costs associated with litigating in remote or rural counties where you do not have established counsel, rather than your corporate home base.
  • Insurance Review: Consult brokers regarding "Additional Insured" endorsements in collateral agreements; ensure dispute resolution terms in these policies do not conflict with Texas public policy.

Strategic Ambiguities & Considerations

  • "Collateral" Agreements: The law applies to agreements "collateral to" construction. It is currently unclear if this extends to project-specific lines of credit or specialized off-site manufacturing contracts. Expect plaintiff attorneys to argue broadly that *any* business deal touching the project is subject to this venue rule.
  • Definition of "Renewed": The statute applies to contracts "renewed" after the effective date. It is undefined whether a significant Change Order constitutes a "renewal." Until case law settles this, treat major amendments as triggers for the new law.
  • Post-Dispute Stipulation: While the law allows parties to agree to a different venue *after* a dispute arises, businesses should not rely on this exception, as opposing parties rarely agree to venue changes that benefit the other side once litigation commences.

Need Compliance Guidance on This Legislation?

JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

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Legislative Timeline

This bill's path through the Texas Legislature

Filed
Feb 18, 2025
Passed House
Apr 29, 2025
Passed Senate
May 19, 2025
Signed
Jun 20, 2025
Effective
Jun 20, 2025
TopicsBusiness & CommerceBusiness & Commerce--generalContractors & SubcontractorsCivil Remedies & Liabilities
03

House Authors

Rep. Richard HayesRepublican · Primary Author
Coauthors (6)

Senate Sponsor

Sen. Bryan HughesRepublican · Primary Sponsor

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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More from Rep. Richard Hayes

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Related by Topic

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Quick Reference

Frequently Asked Questions

Common questions about HB2960

Q

What does Texas HB2960 do?

Effective September 1, 2025, HB2960 removes the "voidable" status of out-of-state venue and choice-of-law clauses in construction contracts, rendering them void ab initio (automatically invalid). This legislation mandates that all disputes arising from construction projects in Texas must be litigated in the specific Texas county where the real property is located, affecting all contractors, subcontractors, and suppliers regardless of their corporate headquarters.

Q

Who authored HB2960?

HB2960 was authored by Texas Representative Richard Hayes during the Regular Session.

Q

When was HB2960 signed into law?

HB2960 was signed into law by Governor Greg Abbott on June 20, 2025.

Q

How significant are the changes in HB2960?

The regulatory priority for HB2960 is rated as "critical". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of HB2960?

The cost impact of HB2960 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does HB2960 address?

HB2960 addresses topics including business & commerce, business & commerce--general, contractors & subcontractors and civil remedies & liabilities.

Q

What are the key dates for HB2960?

Key dates for HB2960: Effective date is 2025-06-20. Consult with legal counsel regarding applicability.

Q

What are the penalties under HB2960?

HB2960 establishes the following penalties: civil penalty of Automatic invalidation of contract provision for Inclusion of clauses requiring litigation, arbitration, or choice of law outside of Texas for Texas construction projects.. Consult with legal counsel for specific applicability to your situation.

Q

Which Texas businesses are affected by HB2960?

HB2960 primarily affects Texas businesses and commercial enterprises. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026