State and local contracts would bar certain payment and dispute terms

State and local governments would face limits on contract terms for settling disputes and choosing which laws apply. The restrictions would cover state and local contracts of any value for buying or disposing of goods, services, or construction and for licensing, accessing, sharing, or using information and technology. Federal or state law could require an otherwise prohibited term. Contracts could not require binding arbitration, another binding dispute process, or another jurisdiction’s law except as required by federal law. They could not conflict with federal or state laws or regulations. State contracts could not place disputes against state government outside Pennsylvania state or federal courts or waive objections that the court location is inconvenient or improper. The restrictions would apply to contracts entered into, amended, or renewed on or after the effective date, 60 days after enactment.

State and local governments could not promise to cover another entity’s liability, defend it, or pay attorney or debt collection fees. These limits would cover state and local purchasing, disposal, and information or technology contracts of any value. The interest and late-fee limit would cover only state government. Federal or state law could require an otherwise prohibited term. State contracts could require interest or late fees only as allowed by the cited Fiscal Code provision and its rules. The limits would apply to contracts entered into, amended, or renewed on or after the effective date, 60 days after enactment.

Prohibited terms would have no legal effect, while the rest of the contract would remain enforceable. This rule would cover state and local contracts of any value for buying or disposing of goods, services, or construction and for licensing, accessing, or using software or information technology. Only terms that violate Section 3 would lose legal effect. This rule would apply to contracts entered into, amended, or renewed on or after the effective date, 60 days after enactment.