PRINTER'S NO. 175
No. 170 Session of 1975
INTRODUCED BY MESSRS. SCHMITT, ZEARFOSS, MANDERINO, RENNINGER,
MRS. GILLETTE, MESSRS. A. K. HUTCHINSON, BRUNNER, MRS. TOLL,
MESSRS. SHANE, VANN, TAYLOR, ROMANELLI, LAUGHLIN, COHEN,
TRELLO, ROSS, ABRAHAM, DeMEDIO, RAPPAPORT, SCHWEDER, IRVIS,
WOJDAK, DOMBROWSKI, GREENFIELD, MORRIS, BERLIN, PIEVSKY,
MUSTO, SHUPNIK, GREEN, PERRY, REED, STAPLETON, FEE, MENHORN,
KOWALYSHYN, ZORD, WARGO, RUGGIERO, WALSH AND O'DONNELL,
JANUARY 28, 1975
REFERRED TO COMMITTEE ON CONSUMER PROTECTION, JANUARY 28, 1975
AN ACT
1 Relating to consumer credit sales and repealing inconsistent
2 provisions of the Goods and Services Installment Sales Act
3 and the Home Improvement Finance Act.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. As used in this act:
7 "Consumer credit sale" means the sale of goods or services as
8 defined in this section.
9 "Goods" means tangible chattels bought for use primarily for
10 personal, family, or household purposes, including certificates
11 or coupons exchangeable for such goods and all chattels personal
12 which are furnished or used in the modernization,
13 rehabilitation, repair, alteration or improvement of real
14 property, including carpeting, but does not include motor
15 vehicles or the construction of new homes.
1 "Home improvement installment contract" or "contract" means
2 an agreement covering a home improvement installment sale,
3 whether contained in one or more documents, together with any
4 accompanying check or bank draft as evidence of indebtedness, to
5 be performed in this Commonwealth pursuant to which the buyer
6 promises to pay in installments all or any part of the time sale
7 price or prices of goods and services, or services.
8 (1) The meaning of the term does not include such an
9 agreement, if
10 (i) it pertains to real property used for a commercial or
11 business purpose;
12 (ii) it covers the sale of goods by a person who neither
13 directly or indirectly performs or arranges to perform any
14 services in connection with the installation of or application
15 of the goods;
16 (iii) it covers only an appliance designed to be
17 freestanding and not built into and permanently affixed as an
18 integral part of the structure such as a stove, freezer,
19 refrigerator, air conditioner, other than one connected with a
20 central heating system, hot water heater and the like;
21 (iv) it covers the sale of goods and the furnishing of
22 services or the furnishing of services thereunder for a cash
23 price stated therein of $300 or less;
24 (v) the loan is contracted for or obtained directly by the
25 retail buyer from the lending institution, person or
26 corporation; or
27 (vi) the loan is insured, or a written commitment to insure
28 it has been issued, pursuant to National housing legislation.
29 (2) The term does not include
30 (i) real property used for commercial or business purposes;
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1 (ii) sale of goods by a person who neither directly or
2 indirectly performs or arranges to perform any services in
3 connection with installation of or appliance of goods;
4 (iii) a free appliance not considered an integral part of
5 the real estate;
6 (iv) loan is contracted for or obtained directly by the
7 retail buyer from the lending institution; or
8 (v) the loan is insured pursuant to Federal housing
9 legislation.
10 "Home improvement installment sale" or "sale" means the sale
11 of goods and furnishing of services or the furnishing of
12 services by a contractor to a retail buyer pursuant to a home
13 improvement installment contract wherein the cash price is
14 stated to be in excess of $300.
15 "Motor vehicle" means any self-propelled device in which,
16 upon which, or by which any person or property is or may be
17 transported or drawn upon a public highway, excepting tractors,
18 power shovels, road machinery, agricultural machinery and other
19 machinery not designed primarily for highway transportation, but
20 which may incidently transport persons or property on a public
21 highway, and excepting such devices which move upon or are
22 guided by a track or travel through the air and shall include
23 trailers and semi-trailers.
24 "Services" means work, labor and services for other than a
25 commercial or business use, including services furnished in
26 connection with the sale or repair of goods or furnished in
27 connection with the repair of motor vehicles or work, labor and
28 services furnished in connection with the installation or
29 application of goods in the modernization, rehabilitation,
30 repair, alteration or improvement of real property, but does not
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1 include a motor vehicle, the construction of new homes or
2 services for which the tariffs, rates, charges, costs or
3 expenses, including in each instance the time sale price, is
4 required by law to be filed with or approved by the Commonwealth
5 or Federal Government or any official department, commission, or
6 agency of the Commonwealth of Pennsylvania or the United States.
7 Section 2. In a consumer credit sale, the seller shall not
8 take a negotiable instrument other than a check or bank draft as
9 evidence of the obligation of the buyer. Any note in a consumer
10 credit sale shall contain the words "Consumer Note - Not
11 Negotiable" clearly and conspicuously printed on its face.
12 Section 3. No contract or obligation relating to a consumer
13 credit sale shall contain any provision nor shall any provisions
14 be effective by which:
15 (1) The buyer agrees not to assert against a seller or an
16 assignee any claim or defense arising out of the transaction.
17 (2) In the absence of the buyer's default, the seller or
18 assignee may arbitrarily and without reasonable cause,
19 accelerate the maturity of any part or all of the amount owing
20 thereunder, without giving the buyer 14 days' notice prior to
21 acceleration or without giving the buyer the right to cure a
22 default for 14 days after mailing of the notice, by tendering
23 the amount of all unpaid installments due at the time of tender
24 plus any unpaid delinquency charges, or by tendering any
25 performance necessary to cure default other than nonpayment of
26 installments, and without the buyer being restored to all his
27 rights after curing of the default, as though no default has
28 occurred. For the purposes of this act "default" is defined only
29 as the nonpayment of one or more installments, or unauthorized
30 disposition of collateral, or failure to procure or maintain in
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1 effect any insurance required under the terms of the contract.
2 (3) The buyer with a gross annual income of less than
3 $10,000 authorizes a judgment by confession in any court,
4 whether by power of attorney or other authorization, taken after
5 the effective date of this act, which shall serve as the basis
6 for a levy or execution until the plaintiff files a complaint
7 averring default and proceeds as in original proceedings in
8 assumpsit. The judgment by confession shall be changed as may be
9 appropriate by a judgment, order or decree on the proceedings
10 based on the complaint; but, the priority of any lien on the
11 confession of judgment shall not be affected thereby. The
12 parties to the action shall have the same rights as parties to
13 other original proceedings in assumpsit. Hereafter, when any
14 plaintiff has received satisfaction for any judgment entered by
15 confession, he shall order the record in the proceeding marked
16 satisfied within 30 days of the receipt thereof, and shall not
17 require any action on the part of the defendant or any payment
18 by him to cover the cost of satisfying the judgment. Any such
19 judgment not revived within 1 year from the date on which the
20 lien of said judgment has lapsed by operation of law shall be
21 considered satisfied and may not thereafter be revived.
22 (4) The seller or assignee of the contract or obligation or
23 a person acting on his behalf is given authority to enter upon
24 the buyer's premises to commit any breach of the peace in the
25 enforcement of the terms of the obligation.
26 (5) The buyer waives any right of action against the seller
27 or assignee of the contract or obligation, or any other person
28 acting on his behalf, for any breach of the peace committed in
29 the enforcement of the terms of the obligation.
30 (6) The buyer relieves the seller or assignee from any
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1 liability for any legal remedy which the buyer may have against
2 the seller or assignee under the contract or obligation or any
3 separate instrument executed in connection therewith.
4 (7) The buyer agrees to the payment of any charge by reason
5 of the exercise of his right to rescind or avoid the contract.
6 (8) The seller or assignee is given the right to commence an
7 action on a contract under provisions of this act in a county
8 other than the county in which the contract was in fact signed
9 by the buyer, the county in which the buyer resides at the
10 commencement of the action, the county in which the buyer
11 resided at the time that the contract was entered into, or in
12 the county in which the goods purchased pursuant to such
13 contract may have been so affixed to real property as to become
14 a part of such real property.
15 (9) The buyer waives his right to a statutory exemption.
16 Section 4. (a) Any assignee of the contract or obligation
17 relating to a consumer credit sale shall be subject to all
18 claims and defenses of the consumer against the seller arising
19 from the sale, notwithstanding any agreement to the contrary:
20 Provided, however, That the assignee's liability under this
21 section shall not exceed the amount owing to the assignee at the
22 time the assignee has notice of the claim or defense.
23 (b) For purposes of this act, "assignee" means any holder of
24 a consumer credit obligation, or the seller, or, in the case of
25 a transaction pursuant to a credit card or similar device, the
26 issuer of that credit card, whether or not the issuer is the
27 seller. An assignee also includes a person who regularly makes
28 loans and who participates in or is connected with a sale. Mere
29 knowledge that a loan will be used for a consumer purchase does
30 not, without some other participation or connection, make the
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1 lender an assignee.
2 (c) Without limiting the scope of the inquiry pursuant to
3 this section regarding the knowledge or reason to know of the
4 lender, the lender will be deemed to have knowledge that the
5 proceeds of a loan will be used in a consumer sale when:
6 (1) The lender is a person related to the seller.
7 (2) The lender supplies to the seller or the seller prepares
8 documents used to evidence the loan obligations of the consumer.
9 (3) The lender has recourse to the seller for nonpayment of
10 the loan through guaranty, reserve account or otherwise.
11 (4) The lender directly or indirectly pays to the seller any
12 commission, fee or other consideration based upon the assistance
13 or cooperation of the seller in the obtaining of the loan.
14 (5) The lender makes payment of the proceeds of the loan to
15 the seller either individually or jointly with the consumer.
16 (6) The lender conditions the extension of credit upon the
17 purchase of goods or services from the seller.
18 (7) The lender knew or should have known that the loan was
19 arranged by the seller or a person acting on behalf of the
20 seller.
21 (8) The lender and seller participate in any arrangement,
22 formal or otherwise, in which the seller refers consumers to the
23 lender.
24 (9) The lender permits the reference to his services to be
25 used by the seller in connection with the consumer sales.
26 (10) The lender takes a security interest in the property
27 which is the subject of the consumer sale.
28 (11) The lender otherwise participates in or is connected
29 with the consumer sale.
30 Section 5. Any party aggrieved by a violation of any of the
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1 provisions of this act may, in a civil suit, collect damages of
2 double the finance charge, but not less than $100 nor more than
3 $1,0000, plus reasonable attorney's fees, for each violation.
4 Section 6. (a) The following parts of acts are repealed
5 absolutely:
6 (1) Section 208, act of August 14, 1963 (P.L.1082, No.464),
7 known as the "Home Improvement Finance Act."
8 (2) Section 402, act of October 28, 1966 (1st Spec.Sess.,
9 P.L.55, No.7), known as the "Goods and Services Installment
10 Sales Act."
11 (b) All acts and part of acts are repealed in so far as they
12 are inconsistent herewith.
13 Section 7. This act shall take effect within 180 days after
14 final enactment.
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