PRIOR PRINTER'S NO. 119 PRINTER'S NO. 241
No. 110 Session of 1993
INTRODUCED BY KUKOVICH, LLOYD, DeLUCA, LEDERER, BLAUM, GORDNER,
HERSHEY, BELARDI, LAUB, TIGUE, HASAY, HALUSKA, CAWLEY,
NAILOR, PHILLIPS, PETRARCA, KREBS, STURLA, KING, TRELLO,
COLAIZZO, MIHALICH, VAN HORNE, MARKOSEK, HESS, BEBKO-JONES,
KENNEY, SURRA, PESCI, FICHTER, BELFANTI, MUNDY, TANGRETTI,
DALEY, SCRIMENTI, DeWEESE, LAUGHLIN, FAJT, PISTELLA,
CAPPABIANCA, BUSH, BAKER, STABACK, RAYMOND, CURRY, KAISER,
SCHEETZ, BATTISTO, GIGLIOTTI, SAYLOR, KASUNIC, D. W. SNYDER,
JOSEPHS AND WOZNIAK, JANUARY 27, 1993
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
FEBRUARY 3, 1993.
AN ACT
1 Requiring certain contracts to be written in plain language; and
2 providing remedies and penalties.
3 The General Assembly of the Commonwealth of Pennsylvania
4 hereby enacts as follows:
5 Section 1. Short title.
6 This act shall be known and may be cited as the Plain
7 Language Consumer Contract Act.
8 Section 2. Legislative findings and intent.
9 (a) Legislative findings.--The General Assembly finds that
10 many consumer contracts are written, arranged and designed in a
11 way that makes them hard for consumers to understand.
12 Competition would be aided if these contracts were easier to
13 understand.
14 (b) Legislative intent.--By passing this act, the General
1 Assembly wants to promote the writing of consumer contracts in
2 plain language. This act will protect consumers from making
3 contracts that they do not understand. It will help consumers to
4 know better their rights and duties under those contracts.
5 Section 3. Definitions.
6 The following words and phrases when used in this act shall
7 have the meanings given to them in this section unless the
8 context clearly indicates otherwise:
9 "Consumer." Any individual who borrows, buys, leases or
10 obtains credit, money, services or property under a consumer
11 contract.
12 "Consumer contract" or "contract." A written agreement
13 between a consumer and a party acting in the usual course of
14 business, made primarily for personal, family or household
15 purposes in which a consumer does any of the following:
16 (1) Borrows money.
17 (2) Buys, leases or rents personal property, real
18 property or services for cash or on credit.
19 (3) Obtains credit.
20 Section 4. Application of act and interpretation.
21 (a) General rule.--This act applies to all contracts that
22 are made, solicited or intended to be performed in this
23 Commonwealth after the effective date of this act.
24 (b) Exclusions.--This act does not apply to the following:
25 (1) Real estate conveyance documents and contracts,
26 deeds and mortgages, real estate certificates of title and
27 title insurance contracts.
28 (2) Consumer contracts involving amounts of more than
29 $50,000.
30 (3) Marital agreements.
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1 (4) Contracts to buy securities.
2 (5) Contracts used by financial institutions which are
3 subject to examination or other supervision by Federal or
4 State regulatory authorities, or by affiliates, subsidiaries
5 or service corporations of such financial institutions.
6 (6) Contracts for insurance or insurance policies.
7 (c) Interpretation.--This act shall be liberally interpreted
8 to protect consumers.
9 Section 5. Test of readability.
10 (a) General rule.--All consumer contracts executed after the
11 effective date of this act shall be written, organized and
12 designed so that they are easy to read and understand.
13 (b) Language guidelines.--In determining whether a contract
14 meets the requirements of subsection (a), a court shall consider
15 the following language guidelines:
16 (1) The contract should use short words, sentences and
17 paragraphs.
18 (2) The contract should use active verbs.
19 (3) The contract should not use technical legal terms,
20 other than commonly understood legal terms, such as
21 "mortgage", "warranty" and "security interest."
22 (4) The contract should not use Latin and foreign words
23 or any other word whenever its use requires reliance upon an
24 obsolete meaning.
25 (5) If the contract defines words, the words should be
26 defined by using commonly understood meanings.
27 (6) When the contract refers to the parties to the
28 contract, the reference should use personal pronouns, the
29 actual or shortened names of the parties, the terms "seller"
30 and "buyer" or the terms "lender" and "borrower."
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1 (7) The contract should not use sentences that contain
2 more than one condition.
3 (8) The contract should not use cross references, except
4 cross references that briefly and clearly describe the
5 substances of the item to which reference is made.
6 (9) The contract should not use sentences with double
7 negatives or exceptions to exceptions.
8 (c) Visual guidelines.--In determining whether a contract
9 meets the requirements of subsection (a), a court shall consider
10 the following guidelines:
11 (1) The contract should have type size, line length,
12 column width, margins and spacing between lines and
13 paragraphs that make the contract easy to read.
14 (2) The contract should caption sections in boldface
15 type.
16 (3) The contract should use ink that contrasts sharply
17 with the paper.
18 (d) Consumer restrictions.--
19 (1) A contract shall have a statement that contains the
20 following:
21 (i) A general description of the property that may
22 be taken or affected by reason of a security interest or
23 contract if the consumer does not meet the terms of the
24 contract. The statement is not required to list all
25 possible exemptions. As it may apply, the following
26 statement may be used: "If you do not meet your contract
27 obligations, you may lose your house, the property that
28 you bought with this loan, other household goods and
29 furniture, your motor vehicle or money in your account
30 with us."
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1 (ii) Contract waivers of a consumer's rights in
2 residential leases.
3 (2) If the disclosures required by the Truth in Lending
4 Act (Public Law 90-321, 15 U.S.C. § 1601 et seq.) are made on
5 the contract, then the statement of consumer restrictions
6 shall appear immediately following these disclosures.
7 Section 6. Language required by other law.
8 The use of language required, recommended or approved by a
9 Federal or State statute, rule, regulation, commentary or
10 official interpretation thereunder, including, but not limited
11 to, the Truth in Lending Act (Public Law 90-321, 15 U.S.C. §
12 1601 et seq.), or the use of model forms required, authorized,
13 approved or recommended by Federal or State authorities shall
14 not violate this act.
15 Section 7. Damages, enforcement, assurance of voluntary
16 compliance and civil penalties.
17 (a) Damages and other remedies.--Any creditor, lessor or
18 seller who does not comply with the test of readability set
19 forth in section 5 is liable to that consumer for all of the
20 following items:
21 (1) Compensation in an amount equal to the value of any
22 actual loss caused by the violation of this act.
23 (2) Statutory damages of $100. If the total amount of
24 the contract is less than $100, these damages are limited to
25 the total amount of the contract.
26 (3) Court costs.
27 (4) Reasonable attorney fees.
28 (5) Any equitable and other relief ordered by the court.
29 (b) Enforcement.--A violation of this act is deemed to be a
30 violation of the act of December 17, 1968 (P.L.1224, No.387),
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1 known as the Unfair Trade Practices and Consumer Protection Law.
2 Section 8. Limitations on liability.
3 (a) Limitations generally.--There shall be no liability
4 under section 7 if any of the following occurs:
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 made a good faith and
10 reasonable effort to comply with this act.
11 (b) Time limit for starting a lawsuit.--A lawsuit under this
12 act must be started within four years from the date on which the
13 contract was last signed.
14 (c) Contract validity.--A violation of this act will not
15 void a contract or otherwise affect its validity.
16 (d) Class action prohibited.--Only an individual action may
17 be brought under this act and no class action shall be permitted
18 under this act.
19 Section 9. Regulations. <--
20 The Attorney General shall promulgate regulations to
21 administer this act.
22 Section 10 9. Waiver of rights invalid. <--
23 A consumer cannot waive the rights given by this act. Any
24 waiver is void, not just voidable.
25 Section 11 10. Other rights and remedies preserved. <--
26 The rights and remedies under this act are in addition to any
27 other legal rights, remedies, claims and defenses.
28 Section 12 11. Severability. <--
29 The provisions of this act are severable. If any provision of
30 this act or its application to any person or circumstance is
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1 held invalid, the invalidity shall not affect other provisions
2 or applications of this act which can be given effect without
3 the invalid provision or application.
4 Section 13 12. Effective date. <--
5 This act shall take effect in one year.
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