PRIOR PRINTER'S NOS. 605, 1806 PRINTER'S NO. 2674
No. 538 Session of 1983
INTRODUCED BY KUKOVICH, DeWEESE, WAMBACH, IRVIS, SEVENTY, TIGUE,
WACHOB, CIMINI, WOZNIAK, SWEET, GALLAGHER, COWELL, WILSON,
ARTY, FATTAH, AFFLERBACH, OLIVER, PRATT, GRUPPO, LEVIN,
PISTELLA, HOEFFEL, CAWLEY, ZWIKL, J. L. WRIGHT, EVANS,
SHOWERS, LLOYD, FARGO, CLARK, MICOZZIE, PETRARCA, BELARDI,
COY, HALUSKA, MICHLOVIC, D. R. WRIGHT, DAWIDA, MORRIS,
LASHINGER, BLAUM, VAN HORNE, PRESTON, WARGO, JACKSON,
BELFANTI, BALDWIN, GANNON, STEIGHNER, PERZEL, COHEN, FISCHER,
ITKIN, F. E. TAYLOR, DeLUCA, DAVIES, RICHARDSON, McHALE,
MURPHY, McINTYRE, MAYERNIK, COLAFELLA, WIGGINS AND TELEK,
MARCH 21, 1983
AS RE-REPORTED FROM COMMITTEE ON JUDICIARY, HOUSE OF
REPRESENTATIVES, AS AMENDED, MARCH 19, 1984
AN ACT
1 Requiring all consumer contracts to be written in plain
2 language.
3 TABLE OF CONTENTS
4 Section 1. Short title.
5 Section 2. Legislative findings and intent.
6 Section 3. Definitions.
7 Section 4. Application of act; interpretation.
8 Section 5. Tests TEST of readability. <--
9 Section 6. Language required by other law.
10 Section 7. Damages; enforcement; assurance of voluntary
11 compliance.
12 Section 8. Limitations on liability.
13 Section 9. Review by Attorney General.
1 Section 10. Waiver of rights invalid.
2 Section 11. Other rights and remedies preserved.
3 Section 12. Effective date.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Short title.
7 This act shall be known and may be cited as the Plain
8 Language Consumer Contract Act.
9 Section 2. Legislative findings and intent.
10 (a) Legislative findings.--The General Assembly finds that
11 many consumer contracts are written, arranged and designed in a
12 way that makes them hard for consumers to understand.
13 Competition would be aided if these contracts were easier to
14 understand.
15 (b) Legislative intent.--By passing this act, the General
16 Assembly wants to promote the writing of consumer contracts in
17 plain language. This act will protect consumers from making
18 contracts that they do not understand. It will help consumers to
19 know better their rights and duties under those contracts.
20 Section 3. Definitions.
21 The following words and phrases when used in this act shall
22 have the meanings given to them in this section unless the
23 context clearly indicates otherwise:
24 "Consumer." Any individual who borrows, buys, leases or
25 obtains credit, money, services or property under a consumer
26 contract.
27 "Consumer contract" or "contract." A written agreement made <--
28 mainly BETWEEN A CONSUMER AND PARTY ACTING IN THE USUAL COURSE <--
29 OF BUSINESS, MADE PRIMARILY for personal, family or household
30 purposes in which a consumer does any of the following:
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1 (1) Borrows money.
2 (2) Buys, leases or rents personal property, real
3 property or services for cash or on credit.
4 (3) Obtains credit.
5 Section 4. Application of act; interpretation.
6 (a) General rule.--This act applies to all contracts that
7 are made, solicited or intended to be performed in this
8 Commonwealth.
9 (b) Exclusions.--This act does not apply to the following:
10 (1) Property descriptions in deeds and mortgages, real
11 estate certificates of title and title insurance contracts.
12 (2) Contracts to buy securities.
13 (3) Contracts between parties who are not acting in the <--
14 usual course of business.
15 (4) (3) Contracts of insurance. <--
16 (4) CONTRACTS IN WHICH THE ORIGINAL AMOUNT OF THE LOAN <--
17 OR LINE OF CREDIT OR THE TOTAL RENT OR PURCHASE PRICE IS MORE
18 THAN $20,000.
19 (c) Interpretation.--This act must be liberally interpreted
20 to protect consumers.
21 Section 5. Tests TEST of readability. <--
22 (a) General rule.--All consumer contracts made or renewed <--
23 EXECUTED after the effective date of this act shall be written, <--
24 organized and designed so they are easy to read and understand.
25 (b) Language requirements.--A contract shall pass all ten of <--
26 the following language tests:
27 (1) It uses short words, sentences and paragraphs as
28 much as possible throughout the contract.
29 (2) It uses active verb forms as much as possible.
30 (3) It does not use technical legal terms except those
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1 terms commonly understood, such as "mortgage" and "warranty."
2 (4) It does not use words with obsolete meanings or
3 Latin, French and archaic English words.
4 (5) If the contract defines words, they are defined in a
5 sense that is commonly understood.
6 (6) It does not use words that differ in their legal
7 meaning from their ordinary meaning. This requirement does
8 not include those words that are given additional meanings by
9 law or regulation, such as "full warranty."
10 (7) It uses personal pronouns, the actual or shortened
11 names of the parties to the contract, or both, when referring
12 to those parties. However, a contract for the sale of real
13 estate or personal property may use the terms "seller" and
14 "buyer" when referring to the parties. A contract in which
15 credit is granted may use the terms "lender" and "borrower."
16 (8) It does not use sentences with double negatives or
17 exceptions to exceptions.
18 (9) It does not use complex conditional sentences. This
19 means that no sentence should have more than one simple
20 conditional clause.
21 (10) It does not have references to other provisions in
22 the same contract, to outside documents or to any laws of any
23 type unless the reference clearly describes the substance of
24 the item to which it relates.
25 (c) Visual requirements.--A contract shall pass all five of
26 the following visual tests:
27 (1) The type is at least 10-point in size, except for
28 the disclosures in consumer credit contracts that are
29 required by the Federal Truth in Lending Act.
30 (2) It has line length, column width, margins and
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1 spacing between lines and paragraphs that make the contract
2 easy to read.
3 (3) It captions each section in boldface type of at
4 least 12-point in size, except for the disclosures in
5 consumer credit contracts that are required by the Federal
6 Truth in Lending Act. If the contract is typed, the captions
7 are underlined.
8 (4) It uses ink that contrasts sharply with the paper.
9 (5) It has a table of contents or alphabetical index if
10 the contract has more than 3,000 words.
11 (d) Consumer restrictions highlighted.--
12 (1) A contract shall have a statement on its front page,
13 in a box, that highlights all of the following:
14 (i) A general description of the property that may
15 be taken or affected if the consumer does not meet the
16 terms of the contract. The statement is not required to
17 list all possible exemptions. As it may apply, the
18 following statement may be used: "If you do not make your
19 payments on time, you may lose your house, the property
20 that you bought with this loan, other household goods and
21 furniture, your motor vehicle or money in your account
22 with us."
23 (ii) Contract waivers of a consumer's rights.
24 (2) If the contract is printed, the highlighted
25 statement shall appear in 10-point boldface type and not in
26 all capitals but shall have this caption in all capitals:
27 "PLEASE READ THIS" in 12-point boldface type. If the
28 contract is typed, the text of the statement shall be
29 underlined and the caption "PLEASE READ THIS" in all
30 capitals.
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1 (3) If the disclosures required by the Federal Truth in
2 Lending Act are made on the contract, then the highlighted
3 statement of consumer restrictions shall appear immediately
4 following these disclosures.
5 (e) Rules and regulations.--The Attorney General may, in the
6 manner provided by law, adopt rules and regulations to clarify
7 further the requirements of subsection (d).
8 (B) LANGUAGE GUIDELINES.--IN DETERMINING WHETHER A CONTRACT <--
9 MEETS THE REQUIREMENTS OF SUBSECTION (A), A COURT OR THE
10 ATTORNEY GENERAL SHALL CONSIDER THE EXTENT TO WHICH A CONTRACT
11 CONFORMS TO THE FOLLOWING LANGUAGE GUIDELINES:
12 (1) THE CONTRACT SHOULD USE SHORT WORDS, SENTENCES AND
13 PARAGRAPHS AS MUCH AS POSSIBLE.
14 (2) IT SHOULD USE ACTIVE VERB FORMS AS MUCH AS POSSIBLE.
15 (3) IT SHOULD AVOID THE USE OF TECHNICAL LEGAL TERMS,
16 OTHER THAN COMMONLY UNDERSTOOD LEGAL TERMS SUCH AS "MORTGAGE"
17 AND "WARRANTY."
18 (4) IT SHOULD AVOID THE USE OF LATIN AND FOREIGN WORDS
19 AND THE USE OF ANY WORD WHENEVER SUCH USE REQUIRES RELIANCE
20 UPON AN OBSOLETE MEANING.
21 (5) IF THE CONTRACT DEFINES WORDS, THE WORDS SHOULD BE
22 DEFINED USING COMMONLY UNDERSTOOD MEANINGS.
23 (6) WHEN REFERRING TO THE PARTIES TO THE CONTRACT, THE
24 REFERENCE SHOULD USE PERSONAL PRONOUNS, THE ACTUAL OR
25 SHORTENED NAMES OF THE PARTIES, THE TERMS "SELLER" AND
26 "BUYER" OR THE TERMS "LENDER" AND "BORROWER."
27 (7) IT SHOULD AVOID THE USE OF SENTENCES THAT CONTAIN
28 MORE THAN ONE CONDITION UNLESS EACH CONDITION IS NUMBERED.
29 (8) IT SHOULD AVOID THE USE OF CROSS REFERENCES, EXCEPT
30 CROSS REFERENCES WHICH MENTION THE SUBJECT OF THE ITEM TO
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1 WHICH REFERENCE IS MADE.
2 (C) VISUAL GUIDELINES.--IN DETERMINING WHETHER A CONTRACT
3 MEETS THE REQUIREMENTS OF SUBSECTION (A), A COURT OR THE
4 ATTORNEY GENERAL SHALL CONSIDER THE EXTENT TO WHICH A CONTRACT
5 CONFORMS TO THE FOLLOWING GUIDELINES:
6 (1) THE CONTRACT SHOULD HAVE TYPE SIZE, LINE LENGTH,
7 COLUMN WIDTH, MARGINS AND SPACING BETWEEN LINES AND
8 PARAGRAPHS THAT MAKE THE CONTRACT EASY TO READ.
9 (2) IT SHOULD CAPTION SECTIONS.
10 (3) IT SHOULD USE INK THAT CONTRASTS SHARPLY WITH THE
11 PAPER.
12 Section 6. Language required by other law.
13 The use of specific language required by a Federal or State <--
14 statute, rule or regulation does not violate this act. This
15 required language shall be excluded when using the tests of
16 readability set out in section 5. OR A FORM REQUIRED, AUTHORIZED <--
17 OR APPROVED BY A FEDERAL OR STATE STATUTE, RULE, REGULATION OR
18 OFFICIAL REGULATORY INTERPRETATION DOES NOT VIOLATE THIS ACT.
19 THE USE OF A MODEL FORM REQUIRED, AUTHORIZED, APPROVED OR
20 RECOMMENDED BY A FEDERAL OR STATE AGENCY, BY THE FEDERAL
21 NATIONAL MORTGAGE ASSOCIATION OR BY THE GOVERNMENT NATIONAL
22 MORTGAGE ASSOCIATION DOES NOT VIOLATE THIS ACT.
23 Section 7. Damages; enforcement; assurance of voluntary
24 compliance.
25 (a) Damages and other remedies.--Any creditor, lessor or
26 seller who does not comply with the tests TEST of readability <--
27 set out in section 5 is liable to that consumer for all of the
28 following items:
29 (1) Out-of-pocket expenses.
30 (2) Statutory damages of $100. If the total amount of <--
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1 the contract is less than $100, the damages are the total
2 amount of the contract.
3 (3) Court costs and reasonable attorney's fees.
4 (2) IN THE CASE OF AN INDIVIDUAL ACTION, STATUTORY <--
5 DAMAGES OF $100 OR THE TOTAL AMOUNT OF THE CONTRACT,
6 WHICHEVER IS LESS. IN THE CASE OF A CLASS ACTION, STATUTORY
7 DAMAGES IN AN AMOUNT DETERMINED BY THE COURT, NOT IN EXCESS
8 OF $10,000.
9 (3) ATTORNEY FEES NOT IN EXCESS OF $2,500 AND COURT
10 COSTS.
11 (4) Any equitable and other relief ordered by the court.
12 (b) Enforcement.--The Attorney General or a district
13 attorney may bring a lawsuit in the name of the Commonwealth
14 against any person to enforce this act. The Attorney General or
15 district attorney may seek equitable and legal relief, including
16 the stopping of violations of the act, the recovery of money
17 lost by consumers and statutory damages.
18 (c) Assurance of voluntary compliance.--The Attorney General
19 or a district attorney may also accept an assurance of voluntary
20 compliance as to any suspected violation of this act from any
21 person who has done or was about to do the act thought to be a
22 violation. The assurance may include an agreement to give back
23 any money or property belonging to a consumer. The assurance
24 shall be in writing and shall be filed with the court of common
25 pleas of the judicial district where the suspected violator
26 resides, has his main place of business or is doing business or
27 with the Commonwealth Court. When filed, the assurance has the
28 same effect as a court order. The assurance is not an admission
29 of a violation for any purpose. The Attorney General or a
30 district attorney may at any time reopen a matter closed by an
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1 assurance for more proceedings in the public interest.
2 Section 8. Limitations on liability.
3 (a) Limitations generally.--There shall be no liability
4 under section 7 if any of the following occur:
5 (1) All parties have finished what was required under
6 the contract.
7 (2) The consumer wrote the contract or the part of it
8 that violates this act.
9 (3) The creditor, seller or lessor shows by a
10 preponderance of the evidence that its violation of the act
11 was not intentional and that it attempted in good faith to
12 comply with this act. The violation must have happened in
13 spite of the use of reasonable procedures that were designed
14 to avoid this type of violation.
15 (4) The contract has been certified by the Attorney
16 General to be in compliance with this act.
17 (5) CONTRACTS WHEREIN THE PARTY ALLEGING A VIOLATION OF <--
18 THIS ACT WAS ADVISED BY COUNSEL IN THE TRANSACTION.
19 (b) Time limit for starting a lawsuit.--A lawsuit under this
20 act must be started within four TWO years from the date on which <--
21 the contract was last signed.
22 (C) NO DEFENSE.--A VIOLATION OF THIS ACT WILL NOT VOID A <--
23 CONTRACT OR CONSTITUTE A DEFENSE TO ANY ACTION TO ENFORCE A
24 CONTRACT.
25 Section 9. Review by Attorney General.
26 (a) Advisory opinion.--A creditor, seller, lessor or any
27 person who prepares and sells consumer contract forms, may
28 request an opinion from the Attorney General on compliance with
29 this act. The Attorney General shall furnish the opinion within
30 a reasonable period of time not to exceed 120 days following the
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1 date the request is made. Failure by the Attorney General to act
2 under this section within 120 days shall be considered a
3 certification of the contract's compliance. The Bureau of
4 Consumer Protection in the Office of Attorney General shall
5 review contracts under this act and shall accept contracts
6 submitted for review for compliance with this act no later than
7 nine months prior to the effective date of this act.
8 (b) Determining compliance.--The Attorney General shall
9 apply the tests TEST of readability set out in section 5. <--
10 (c) Review.--After reviewing the contract, the Attorney
11 General may:
12 (1) Certify that the contract complies with this act.
13 (2) Decline to certify that the contract complies with
14 this act and note his objections to the contractual language.
15 (3) Decline to review the contract and refer the party <--
16 submitting the contract to other previously certified
17 contracts of the same type.
18 (4) (3) Decline to review the contract because its
19 compliance with this act is the subject of pending
20 litigation.
21 (5) (4) Decline to review the contract because the <--
22 contract is not subject to this act.
23 (d) Compliance.--Any consumer contract certified under this
24 section complies with this act. Certification of a contract
25 under this section does not represent CONSTITUTE A CERTIFICATION <--
26 that the contract meets other legal requirements.
27 (e) Good faith.--If a contract is not submitted to the
28 Attorney General for review under this section, it will not show
29 a lack of good faith nor shall it raise a presumption that the
30 contract violates this act.
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1 (f) Fee.--The Attorney General shall MAY charge a reasonable <--
2 fee to persons who submit contracts for review under this act.
3 Section 10. Waiver of rights invalid.
4 A consumer cannot waive the rights given by this act. Such a
5 waiver is void, not just voidable.
6 Section 11. Other rights and remedies preserved.
7 The rights and remedies under this act are in addition to any
8 other legal rights, remedies, claims and defenses.
9 Section 12. Effective date.
10 This act shall take effect in one year.
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