The bill enacts a new provision in the Louisiana Civil Code, specifically Article 1519.1, which addresses the enforceability of penalty clauses in juridical acts. It stipulates that any provision that seeks to penalize an individual for filing an action to contest an inter vivos or mortis causa donation, succession, or trust administration is unenforceable if, at the time of filing, there exists a factual basis that would lead a reasonable person to believe there is a substantial likelihood of success in the challenge. This legislative change aims to provide clarity and consistency in the application of penalty clauses, which have historically been inconsistently interpreted by Louisiana courts.

The new article reflects a modern approach to penalty clauses, aligning with practices in other jurisdictions, and emphasizes the importance of allowing legitimate challenges to donations and successions without the fear of punitive repercussions. It also clarifies that good faith actions for interpretation or compromise should not trigger penalty clauses, and courts are encouraged to exercise discretion in evaluating the nature of actions taken by donees. Overall, this bill seeks to balance the interests of donors in preventing frivolous lawsuits with the rights of individuals to contest potentially unjust provisions in legal documents.