SENATE AMENDED
PRIOR PRINTER'S NOS. 605, 1806, 2674, PRINTER'S NO. 3157
2740
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, 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
SENATOR HOLL, BANKING AND INSURANCE, IN SENATE, AS AMENDED,
JUNE 12, 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. 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.
1 Section 9. Review by Attorney General.
2 Section 10. Waiver of rights invalid.
3 Section 11. Other rights and remedies preserved.
4 Section 12. Effective date.
5 The General Assembly of the Commonwealth of Pennsylvania
6 hereby enacts as follows:
7 Section 1. Short title.
8 This act shall be known and may be cited as the Plain
9 Language Consumer Contract Act.
10 Section 2. Legislative findings and intent.
11 (a) Legislative findings.--The General Assembly finds that
12 many consumer contracts are written, arranged and designed in a
13 way that makes them hard for consumers to understand.
14 Competition would be aided if these contracts were easier to
15 understand.
16 (b) Legislative intent.--By passing this act, the General
17 Assembly wants to promote the writing of consumer contracts in
18 plain language. This act will protect consumers from making
19 contracts that they do not understand. It will help consumers to
20 know better their rights and duties under those contracts.
21 Section 3. Definitions.
22 The following words and phrases when used in this act shall
23 have the meanings given to them in this section unless the
24 context clearly indicates otherwise:
25 "Consumer." Any individual who borrows, buys, leases or
26 obtains credit, money, services or property under a consumer
27 contract.
28 "Consumer contract" or "contract." A written agreement
29 between a consumer and party acting in the usual course of
30 business, made primarily for personal, family or household
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1 purposes in which a consumer does any of the following:
2 (1) Borrows money.
3 (2) Buys, leases or rents personal property, real
4 property or services for cash or on credit.
5 (3) Obtains credit.
6 Section 4. Application of act; interpretation.
7 (a) General rule.--This act applies to all contracts that
8 are made, solicited or intended to be performed in this
9 Commonwealth.
10 (b) Exclusions.--This act does not apply to the following:
11 (1) Deeds, mortgages, mortgage bonds and notes, real
12 estate certificates of title, title insurance contracts and
13 property descriptions contained in deeds, mortgages, mortgage
14 bonds and notes, real estate certificates of title and title
15 insurance contracts.
16 (2) Contracts to buy securities.
17 (3) Contracts in which the original amount of the loan
18 or line of credit or the total rent or purchase price is more
19 than $20,000.
20 (4) CONTRACTS OF INSURANCE. THE INSURANCE COMMISSIONER <--
21 MAY ADOPT REGULATIONS APPLYING REASONABLE STANDARDS OF
22 READABILITY TO INSURANCE CONTRACTS INTENDED PRIMARILY FOR
23 PERSONAL, FAMILY OR HOUSEHOLD PURPOSES BASED ON THE STANDARDS
24 OF READABILITY SET FORTH IN THE MODEL REGULATIONS ADOPTED ON
25 JUNE 15, 1980, BY THE NATIONAL ASSOCIATION OF INSURANCE
26 COMMISSIONERS.
27 (5) CONTRACTS USED BY FINANCIAL INSTITUTIONS EXAMINED BY
28 STATE OR FEDERAL REGULATORY AUTHORITIES.
29 (c) Interpretation.--This act must be liberally interpreted
30 to protect consumers.
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1 Section 5. Test of readability.
2 (a) General rule.--All consumer contracts executed after the
3 effective date of this act shall be written, organized and
4 designed so they are easy to read and understand.
5 (b) Language guidelines.--In determining whether a contract
6 meets the requirements of subsection (a), a court or the
7 Attorney General shall consider the extent to which a contract
8 conforms to the following language guidelines:
9 (1) The contract should use short words, sentences and
10 paragraphs as much as possible.
11 (2) It should use active verb forms as much as possible.
12 (3) It should avoid the use of technical legal terms,
13 other than commonly understood legal terms such as "mortgage"
14 and "warranty."
15 (4) It should avoid the use of Latin and foreign words
16 and the use of any word whenever such use requires reliance
17 upon an obsolete meaning.
18 (5) If the contract defines words, the words should be
19 defined using commonly understood meanings.
20 (6) When referring to the parties to the contract, the
21 reference should use personal pronouns, the actual or
22 shortened names of the parties, the terms "seller" and
23 "buyer" or the terms "lender" and "borrower."
24 (7) It should avoid the use of sentences that contain
25 more than one condition unless each condition is numbered.
26 (8) It should avoid the use of cross references, except
27 cross references which mention the subject of the item to
28 which reference is made.
29 (c) Visual guidelines.--In determining whether a contract
30 meets the requirements of subsection (a), a court or the
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1 Attorney General shall consider the extent to which a contract
2 conforms to the following guidelines:
3 (1) The contract should have type size, line length,
4 column width, margins and spacing between lines and
5 paragraphs that make the contract easy to read.
6 (2) It should caption sections.
7 (3) It should use ink that contrasts sharply with the
8 paper.
9 Section 6. Language required by other law.
10 The use of specific language or a form required, authorized
11 or approved by a Federal or State statute, rule, regulation or
12 official regulatory interpretation does not violate this act.
13 The use of a model form required, authorized, approved or
14 recommended by a Federal or State agency, by the Federal
15 National Mortgage Association, by the Federal Home Loan Mortgage
16 Corporation or by the Government National Mortgage Association
17 does not violate this act.
18 Section 7. Damages; enforcement; assurance of voluntary
19 compliance.
20 (a) Damages and other remedies.--Any creditor, lessor or
21 seller who does not comply with the test of readability set out
22 in section 5 is MAY BE liable to that consumer for all of the <--
23 following items:
24 (1) Out-of-pocket expenses.
25 (2) In the case of an individual action, statutory
26 damages of $100 or the total amount of the contract,
27 whichever is less. In the case of a class action, statutory <--
28 damages in an amount determined by the court, not in excess
29 of $10,000.
30 (3) Court costs.
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1 (4) Any equitable and other relief ordered by the court.
2 ONLY AN INDIVIDUAL ACTION MAY BE MAINTAINED UNDER THIS SECTION <--
3 AND NO CLASS ACTION SHALL BE PERMITTED HEREUNDER.
4 (b) Enforcement.--The Attorney General or a district
5 attorney may bring a lawsuit in the name of the Commonwealth
6 against any person to enforce this act. The Attorney General or
7 district attorney may seek equitable and legal relief, including
8 the stopping of violations of the act, the recovery of money
9 lost by consumers and statutory damages.
10 (c) Assurance of voluntary compliance.--The Attorney General
11 or a district attorney may also accept an assurance of voluntary
12 compliance as to any suspected violation of this act from any
13 person who has done or was about to do the act thought to be a
14 violation. The assurance may include an agreement to give back
15 any money or property belonging to a consumer. The assurance
16 shall be in writing and shall be filed with the court of common
17 pleas of the judicial district where the suspected violator
18 resides, has his main place of business or is doing business or
19 with the Commonwealth Court. When filed, the assurance has the
20 same effect as a court order. The assurance is not an admission
21 of a violation for any purpose. The Attorney General or a
22 district attorney may at any time reopen a matter closed by an
23 assurance for more proceedings in the public interest.
24 Section 8. Limitations on liability.
25 (a) Limitations generally.--There shall be no liability
26 under section 7 if any of the following occur:
27 (1) All parties have finished what was required under
28 the contract.
29 (2) The consumer wrote the contract or the part of it
30 that violates this act.
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1 (3) The creditor, seller or lessor shows by a
2 preponderance of the evidence that its violation of the act
3 was not intentional and that it attempted in good faith to
4 comply with this act. The violation must have happened in
5 spite of the use of reasonable procedures that were designed
6 to avoid this type of violation.
7 (4) The contract has been certified by the Attorney
8 General to be in compliance with this act.
9 (5) The consumer alleging a violation of this act was
10 advised by counsel about the contract before signing it.
11 (b) Time limit for starting a lawsuit.--A lawsuit under this
12 act must be started within two years from the date on which the
13 contract was last signed.
14 (c) No defense.--A violation of this act will not void a
15 contract or constitute a defense to any action to enforce a
16 contract.
17 Section 9. Review by Attorney General.
18 (a) Advisory opinion.--A creditor, seller, lessor or any
19 person who prepares and sells consumer contract forms, may
20 request an opinion from the Attorney General on compliance with
21 this act. The Attorney General shall furnish the opinion within
22 a reasonable period of time not to exceed 120 days following the
23 date the request is made. Failure by the Attorney General to act
24 under this section within 120 days shall be considered a
25 certification of the contract's compliance. The Bureau of
26 Consumer Protection shall perform the review of contracts under
27 this act for the Attorney General and shall begin to accept
28 contracts submitted for review for compliance with this act no
29 later than nine months prior to the effective date of this act.
30 (b) Determining compliance.--The Attorney General shall
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1 apply the test of readability set out in section 5.
2 (c) Review.--After reviewing the contract, the Attorney
3 General may:
4 (1) Certify that the contract complies with this act.
5 (2) Decline to certify that the contract complies with
6 this act and note his objections to the contractual language.
7 (3) Decline to issue an opinion on the contract because
8 its compliance with this act is the subject of pending
9 litigation.
10 (4) Decline to issue an opinion on the contract because
11 the contract is not subject to this act.
12 (d) Compliance.--Any consumer contract certified under this
13 section complies with this act. Certification of a contract
14 under this section does not constitute a certification that the
15 contract meets other legal requirements.
16 (e) Good faith.--If a contract is not submitted to the
17 Attorney General for review under this section, it will not show
18 a lack of good faith nor shall it raise a presumption that the
19 contract violates this act.
20 (f) Fee.--The Attorney General may charge a reasonable fee
21 UP TO $100 to persons who submit contracts for review under this <--
22 act.
23 Section 10. Waiver of rights invalid.
24 A consumer cannot waive the rights given by this act. Such a
25 waiver is void, not just voidable.
26 Section 11. Other rights and remedies preserved.
27 The rights and remedies under this act are in addition to any
28 other legal rights, remedies, claims and defenses.
29 Section 12. Effective date.
30 This act shall take effect in one year.
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