PRIOR PRINTER'S NOS. 175, 1732, 1978 PRINTER'S NO. 2016
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, O'DONNELL,
McLANE AND MRKONIC, JANUARY 28, 1975
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
JULY 16, 1975
AN ACT
1 Relating to consumer transactions, including credit sales,
2 consumer leases, related direct consumer loans, and advances
3 made to credit card users, regulating contract provisions,
4 the termination of consumer defenses, the disclaimer of
5 warranties, and the entry of judgments by confession,
6 providing additional exemptions from execution in actions on
7 consumer transactions, prohibiting waivers of exemptions,
8 imposing duties on the Attorney General and on
9 prothonotaries, and repealing inconsistent provisions of the
10 Goods and Services Installment Sales Act, the Home
11 Improvement Finance Act, the Motor Vehicle Sales Finance Act
12 and other inconsistent laws.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. Short Title.--This act shall be known and may be
16 cited as the "Consumer Transactions Act."
17 Section 2. Definitions.--The following words and phrases
18 when used in this act shall have, unless the context clearly
19 indicates otherwise, the meanings given to them in this section:
1 "Consumer." An individual buying, or leasing goods or
2 services acquired primarily for personal, family or household
3 use.
4 "Consumer goods." Goods used, leased or bought for use
5 primarily for personal, family or household purposes, whether
6 acquired through a cash or credit transaction.
7 "Consumer services." Work, labor or services furnished
8 primarily for personal, family or household purposes. The term
9 includes services furnished in connection with the sale or
10 repair of goods, the repair or servicing of motor vehicles, or
11 the installation or application of goods in the modernization,
12 rehabilitation, repair, alteration, improvement or
13 reconstruction of residential real property EXCEPTING, HOWEVER, <--
14 THE ERECTION OF ANY NEW RESIDENTIAL BUILDINGS THEREON, whether
15 the goods become residential fixtures or become real property
16 and whether acquired through a cash or credit transaction but
17 not including services for which the tariffs are regulated by
18 the Pennsylvania Public Utility Commission.
19 "Default." Notwithstanding any other definition in the
20 contract or agreement of the parties, default means only one or
21 more of the following: the nonpayment of one or more
22 installments; an unauthorized voluntary or involuntary
23 disposition of the collateral increasing the secured party's
24 risk of nonpayment; a failure to repair significant damage to
25 the collateral; a failure to procure or maintain in effect any
26 insurance required under the terms of the contract or agreement;
27 or the commission of any other act specified in the agreement
28 which reasonably impairs the prospect of payment or performance.
29 "Seller." Means any person who in the course of his business
30 sells, leases, assigns, or by any other means, conveys consumer
19750H0170B2016 - 2 -
1 goods or services, OTHER THAN THE CONSTRUCTION OF ANY NEW <--
2 RESIDENTIAL BUILDINGS.
3 "Supplying consumer goods or services." Selling, leasing or
4 assigning consumer goods or services in the course of business.
5 Section 3. Disclaimers of Implied Warranties.--Previously
6 used, shopworn or damaged consumer goods may be supplied to on
7 an "as is" or "with all faults" basis: Provided, That the
8 contract of sale, sales receipt, or other document evidencing
9 the transaction shall contain on its face the following notice,
10 in 12 point or larger bold type, printed directly above or
11 beside the space provided for the buyer's signature or on the
12 bottom of the document:
13 NOTICE TO BUYER
14 THE GOODS YOU ARE BUYING ARE SOLD TO YOU "AS IS" OR "WITH ALL
15 FAULTS." THIS MEANS THAT NO WARRANTY OR GUARANTEE IS GIVEN
16 AND THAT YOU MUST BEAR THE FULL RISK THAT THESE GOODS MIGHT
17 BE DEFECTIVE.
18 EXERCISE CAUTION BEFORE BUYING!
19 Section 4. Prohibited Contract Terms.--(a) No person
20 supplying consumer goods or services shall use any form of
21 contract or agreement containing any clause or term nor shall
22 any such clause or term be effective whereby:
23 (1) The consumer agrees not to assert against the person
24 supplying the goods or services or any assignee or transferee of
25 the consumer's contract or agreement any claim or defense
26 arising out of the consumer transaction.
27 (2) The person supplying the goods or services, any
28 assignee, or any person acting on behalf of either is given
29 authority to commit a breach of the peace in the enforcement of
30 the terms of the agreement or contract.
19750H0170B2016 - 3 -
1 (3) The consumer waives any right of action against the
2 person supplying the goods or services, any assignee, or any
3 person acting on behalf of either, for any violation of this act
4 or any breach of the peace or other wrongful act committed in
5 the enforcement of the contract or agreement; but this provision
6 shall not prohibit a release of any accrued cause of action as a
7 part of a bona fide settlement of a dispute.
8 (4) Any provision with respect to repayments or security
9 prohibited by section 11 of this act.
10 (b) It shall be a violation of this act for any person
11 supplying consumer goods or services to refer to or utilize any
12 clause, provision or term prohibited by this act in any attempt
13 to effect collection from a consumer or a settlement with a
14 consumer.
15 Section 5. Control of Acceleration Clauses.--(a) No person
16 supplying consumer goods OTHER THAN MOTOR VEHICLES and services <--
17 shall use any contract, agreement, note or other instrument in a
18 consumer credit transaction which provides for acceleration of
19 the entire unpaid indebtedness or any portion thereof in advance
20 of the stated due date unless the provision for acceleration is
21 expressed to be operative nor shall such acceleration be
22 effective unless:
23 (1) the person supplying the goods or services, or an
24 assignee, shall have first given the consumer 14 days prior
25 notice of the intent to accelerate, of the grounds on which the
26 acceleration is based, and of the consequence of default in a
27 conspicuous place and in the following form on the notice served
28 by such person:
29 IMPORTANT NOTICE REQUIRED BY LAW
30 NOTICE OF INTENTION
19750H0170B2016 - 4 -
1 TO ACCELERATE
2 THE MATURITY OF OBLIGATION,
3 COMMENCE LEGAL ACTION AND/OR REPOSSESS
4 YOU HAVE DEFAULTED ON YOUR OBLIGATION, DESCRIBED
5 AS FOLLOWS:
6 Transaction No.
7 Date of Contract
8 Contract secured by the following goods you purchased
9 (Specify)
10 Contract secured by the following collateral
11 (Specify)
12 A. _____You have violated the following terms of your contract:
13 (Description, using original contract language)
14 B. _____You have failed to make installment payments on:
15 (Dates)
16 A statement of your account is as follows:
17 1. Initial amount - $ _____
18 2. Present amount owing (initial amount minus
19 payments you have made) - $ _____
20 3. Late payments in the total amount of $_____ due as
21 of (date) - $ _____
22 4. Current payment due as of (date) - $ _____
23 5. Late charges $ _____
24 6. Other costs (specify) - $____
25 7. Actual cost of service of this notice - $ _____
26 8. TOTAL AMOUNT OF PAYMENTS DUE (total of 3, 4, 5,
27 6 and 7) - $ _____
28 YOU HAVE THE RIGHT TO BRING YOUR ACCOUNT UP TO DATE. IN
29 ORDER TO DO SO, YOU MUST DO THE FOLLOWING NOT LATER THAN (date),
30 WHICH IS NOT LESS THAN 14 DAYS FROM THE DATE YOU RECEIVE THIS
19750H0170B2016 - 5 -
1 NOTICE:
2 A. _____(Specify required performance, as described above)
3 B. _____(PAY THIS AMOUNT: total amounts of payments
4 due under "8", above)
5 If you do as required under "A" and "B" above, you may
6 continue to keep your contract in effect without any additional
7 penalties or costs being imposed.
8 SHOULD YOU FAIL TO DO SO BY THE SPECIFIED DATE, THE ENTIRE
9 PRESENT AMOUNT OWING YOUR CONTRACT WILL BECOME IMMEDIATELY DUE;
10 ANY GOODS BY WHICH THE CONTRACT IS SECURED AND/OR ANY COLLATERAL
11 GIVEN UNDER THAT CONTRACT MAY BE IMMEDIATELY, PEACEFULLY
12 REPOSSESSED AND LEGAL ACTION MAY BE BEGUN BEFORE OR AFTER
13 REPOSSESSION.
14 Any overdue installments may be paid at the following:
15 ____________________________
16 (address) (phone)
17 Payment must be made only by (specify: personal check, money
18 order, other).
19 ; and
20 (2) the consumer shall be in default; and
21 (3) the consumer has not, within the 14-day period of the
22 notice, cured the default; or
23 (4) the default is the third default of the consumer during
24 the term of the contract.
25 (b) Upon the cure of any default the acceleration shall
26 terminate and the contract shall be reinstated in accordance
27 with its original terms. Cure shall consist of the elimination
28 of the grounds for default, including the payment of all unpaid
29 installments falling due without acceleration in accordance with
30 the contract before and during the period of the default, the
19750H0170B2016 - 6 -
1 payment of any legal late charges, cost of suit and reasonable
2 attorney's fees.
3 (c) Notices of acceleration in the form as set forth above
4 shall be mailed, certified mail return receipt requested, and to
5 be received by the consumer, not less than 14 days before the
6 date at which the indebtedness will become due by acceleration,
7 EXCEPT THAT IF THE CERTIFIED MAIL IS RETURNED UNSIGNED, THE <--
8 INDEBTEDNESS WILL BECOME DUE BY ACCELERATION 20 DAYS AFTER THE
9 DATE THE NOTICE WAS MAILED. If a return receipt shows a delivery
10 at a date less than 14 days from the date fixed for acceleration
11 the consumer may effect cure within 14 days of the date of the
12 receipt shown.
13 Section 6. Entry of Judgments by Confession.--(a)
14 Notwithstanding any other provision of this act, an agreement
15 evidencing a consumer transaction may provide for the entry of
16 judgment by confession on warrant of attorney. Every such
17 warrant shall specify that the judgment is confessed pursuant to
18 and subject to the provisions of this act. The prothonotary of
19 any court in which such judgment is entered shall so note in the
20 appropriate docket. Such judgment may be confessed, according to
21 the terms of the agreement, at any time and for any amount
22 specified in the agreement. Any judgment which fails to comply
23 with the provisions of this section shall be ineffective.
24 (b) No such judgment shall serve as the basis for a levy or
25 execution until the plaintiff files a complaint averring an
26 uncured default and proceeds as in original proceedings in
27 assumpsit. In the proceedings the judgment shall be amended as
28 may be appropriate by the judgment or order entered in the
29 proceedings on the complaint, but the lien of the judgment shall
30 date from the date of the entry of the judgment by confession.
19750H0170B2016 - 7 -
1 (c) A failure by a judgment creditor who has received
2 satisfaction of the debt in full to notify the prothonotary
3 thereof, within ten days of receipt of satisfaction of the debt
4 in full shall constitute a violation of this act.
5 Section 7. Limitation on Negotiable Instruments.--(a) No
6 person supplying consumer goods or services shall take as
7 evidence of or security for the performance of any obligation of
8 the consumer any negotiable instrument (as defined in Article 3
9 of the Uniform Commercial Code) other than a check or bank draft
10 for current collection taken in conditional payment of an
11 obligation presently due.
12 (b) Any person supplying consumer goods and services and
13 taking a written instrument for the payment of deferred consumer
14 obligations shall conspicuously mark the instrument "Consumer
15 Obligation - Not Negotiable" in conspicuous type on its face.
16 Section 8. Rights of Assignees of Consumer Contracts or
17 Agreements.--(a) An assignee of a person supplying consumer
18 goods and services or a transferee of a consumer's monetary
19 obligation incurred in a consumer transaction shall not be
20 liable to the consumer in respect of any claim or defense
21 against the person supplying the consumer goods or services
22 beyond the amount originally paid by such assignee or transferee
23 for the obligation assigned or transferred.
24 (b) This section shall not limit the right of a consumer to
25 withhold payments due in respect of a consumer transaction
26 pending settlement of a disputed claim of which notice has been
27 given.
28 Section 9. Transferees Subject to Consumer Claims and
29 Defenses.--(a) A transferee of a consumer obligation arising out
30 of a consumer transaction shall be subject to all claims or
19750H0170B2016 - 8 -
1 defenses of the consumer which are good against the person
2 supplying the consumer goods and services except that:
3 (1) a transferee shall not be subject to claims or defenses
4 arising out of other transactions between the parties which
5 shall accrue after the consumer has been notified of the
6 transfer; or
7 (2) a transferee of a check or bank draft taken for current
8 collection in payment of a debt already due by a person
9 supplying consumer goods or services may become a holder in due
10 course of the check or bank draft, but there can be no holder in
11 due course of any other instrument taken in a consumer
12 transaction.
13 (b) The liability under this section exists whether the
14 transferred obligation is evidenced by a negotiable instrument,
15 whether the contract or agreement contains a clause waiving
16 defenses against an assignee, whether the person supplying goods
17 and services has marked any negotiable instrument as required by
18 section 7 (b) of this act and whether the transferee is an
19 immediate or remote transferee of the person supplying consumer
20 goods and services.
21 (c) Notwithstanding anything contained in this act, neither
22 a depository nor a collecting nor a payor bank shall be or
23 become liable to a consumer's defenses or claims against a
24 person supplying consumer goods or service by reason of the
25 handling in course of current collection for a customer of any
26 item made, drawn or accepted by a consumer.
27 Section 10. Related Lenders and Credit Card Issuers Subject
28 to Consumer Claims and Defenses.--(a) With respect to a consumer
29 loan, other than a loan primarily for agricultural purposes, a
30 lender who is a related lender with respect to a person
19750H0170B2016 - 9 -
1 supplying consumer goods or services, shall be subject to all
2 claims and defenses of the borrower arising out of the consumer
3 transaction for which the loan was made, which would be
4 assertable in an action between the borrower and the person
5 supplying the goods and services but the lender's liability in
6 the aggregate for any one consumer transaction shall not exceed
7 the amount originally loaned to the borrower in respect of that
8 transaction.
9 (b) The term "related lender" refers to a lender whose
10 participation in a consumer transaction is arranged by the
11 seller of the consumer goods purchased. Knowledge alone on the
12 part of the lender that the proceeds of the loan shall be used
13 to purchase consumer goods shall not cause the lender to be a
14 "related lender." Without limiting the scope of inquiry
15 concerning arrangement by the seller, the seller will be deemed
16 to have arranged the loan, and the lender may be presumed to be
17 a "related lender" when one or more of the following
18 circumstances exist:
19 (1) the lender or a principal officer, principal
20 shareholder, partner, owner, or principal supplier of capital is
21 so connected with or related by blood or through marriage to the
22 person supplying the consumer goods or services or one of such
23 person's principal officers, principal shareholders, partners,
24 owners or principal supplier of capital other than that supplied
25 by the lender, that dealings between the lender and the person
26 supplying the consumer goods and services would not be at arm's
27 length; or
28 (2) the seller has arranged for the extension of credit to
29 the borrower by the lender by providing (to the lender) either
30 credit application substantially completed by the consumer, or
19750H0170B2016 - 10 -
1 such information acquired from the consumer as to enable the
2 lender to complete substantially such an application; or
3 (3) the person supplying the consumer goods or services
4 receives a fee or other thing of value from the lender in
5 respect of the loan or otherwise has participated, directly or
6 indirectly, with the lender in the finance charge on the loan,
7 or has agreed to purchase from the lender, upon default, any
8 collateral held for the loan; or
9 (4) the lender directly or indirectly controls, or is
10 directly or indirectly controlled by, or is under direct or
11 indirect common control with the person supplying the consumer
12 goods or services; or
13 (5) the lender and the person supplying the consumer goods
14 and services are engaged in a joint venture to produce consumer
15 obligations payable to the lender; or
16 (6) the lender has recourse to the seller for nonpayment of
17 the loan through guaranty, reserve account or otherwise.
18 (c) An issuer of a third party credit card shall be a
19 related lender if the consumer goods or services are acquired by
20 the use of its credit card and the goods or services acquired:
21 (1) have a cash price of more than $50; and
22 (2) the consumer has made a good faith attempt to obtain
23 satisfactory resolution of a disagreement or problem relative to
24 the transaction from the supplier honoring the credit card; and
25 (3) were acquired in the same state as the mailing address
26 previously provided by the card holder or was within 100 miles
27 from such address.
28 The amount of claims or defenses asserted by the third party
29 credit card holder shall not exceed the amount of credit
30 outstanding with respect to such transaction at the time the
19750H0170B2016 - 11 -
1 card holder first notifies the card issuer or the person
2 honoring the credit card of such claim or defense. For the
3 purpose of determining the amount of credit outstanding in the
4 preceding sentence, payments and credits to the card holder's
5 account are deemed to have been applied, in the order indicated,
6 to the payment of (i) late charges in the order of their entry
7 to the account; (ii) finance charges in order of their entry to
8 the account; and (iii) debits to the account other than those
9 set forth above, in the order in which each debit entry to the
10 account was made.
11 (d) The contract or agreement of the related lender with the
12 consumer shall be subject to the provisions of section 4.
13 Section 11. Prohibited Terms and Security Interests.--(a) No
14 consumer transaction shall, except under a revolving credit
15 plan, have any scheduled payment including interest or finance
16 charge which is more than twice as large as the average of the
17 earlier scheduled payments unless the consumer has the option to
18 refinance the amount of that larger payment or payments upon the
19 same interest rate and other terms and without penalty in
20 further payments no larger than the average of the payments
21 preceding such larger payments.
22 (b) No security interest taken or reserved in a consumer
23 transaction shall attach to goods or services acquired in a
24 prior or subsequent consumer transaction with the same person
25 unless the contract or agreement provides that payments received
26 in respect of unpaid principal shall be applied first to the
27 unpaid principal amount due in respect of the unpaid debts first
28 incurred. To the extent that debts are paid according to this
29 subsection, security interests in items of property for which
30 such debts were first incurred shall terminate.
19750H0170B2016 - 12 -
1 (c) No contract or agreement entered into in respect of a
2 consumer transaction shall grant a security interest in goods
3 not acquired from or financed by a direct loan from the same
4 secured party, but this section shall not apply to loans made by
5 a lender which is not a related lender with respect to the
6 transaction.
7 Section 12. Consumer Property Exempt from Execution.--(a) In
8 addition to the exemptions provided by other law the following
9 property shall be exempt from levy and sale under a judgment
10 other than a judgment on a purchase money security interest,
11 obtained in a proceeding arising out of a consumer transaction:
12 (1) All medical health equipment and supplies used for
13 health purposes by the debtor, the debtor's spouse and
14 dependents.
15 (2) Tools of the trade, including any income producing
16 property used in the principal occupation of the debtor, not to
17 exceed the value of $500.
18 (3) Furniture, furnishings, appliances and fixtures
19 ordinarily and generally used for household purposes in the
20 principal residence of the debtor to the value of $1,500; and
21 clothing and ordinary wearing apparel.
22 (b) The exemptions provided in the preceding section shall
23 not prevent the levy upon and sale of property subject to a
24 purchase money security interest to satisfy a judgment obtained
25 for the unpaid purchase price, nor shall any provision of this
26 act be construed to affect the right of a secured party to
27 repossess such property and expose it to sale; howevever, after
28 any such sale, an amount equivalent to a fair market value of
29 such property at the time of repossession, minus actual and
30 reasonable costs of repossession and sale, shall be credited
19750H0170B2016 - 13 -
1 against the total amount of the secured debt. "Fair market
2 value" shall be construed to mean the price that would induce a
3 willing seller to sell and a willing buyer to buy the property
4 in a voluntary transaction.
5 (c) At the time of making any levy upon the goods or real
6 estate of a consumer, the officer making the levy shall give the
7 consumer a notice setting forth the exemptions from execution to
8 which the consumer is entitled and shall not levy upon any
9 property specifically exempted or then designated by the
10 consumer as property to be retained within the dollar limits of
11 any exemption of property up to a specific dollar limit, except,
12 in each case where the judgment was obtained upon a debt secured
13 by a purchase money security interest in the particular
14 property.
15 (d) No waiver of exemptions shall be effective.
16 Section 13. Civil Recoveries.--Any person who violates any
17 provision of sections 4, 5 and 6 of this act shall be liable for
18 each violation to each consumer with respect to whom a violation
19 is committed in an amount equal to the damages actually
20 suffered, but in any event not less than the finance charges or
21 the time price differential.
22 Section 14. Public Enforcement.--(a) Whenever the Attorney
23 General or any district attorney has reason to believe that any
24 person is using or is about to use any method, form of contract,
25 or act prohibited by this act, and that proceedings would be in
26 the public interest that official may bring an action in the
27 name of the Commonwealth against such person to restrain by
28 injunction the use of further use of such method, form or
29 contract or act. The action may be brought in the court of
30 common pleas in the county in which such person resides, has a
19750H0170B2016 - 14 -
1 principal place of business or is doing business in this
2 Commonwealth, or it may be brought in the Commonwealth Court.
3 The courts are authorized upon proper proof of the violation or
4 proposed violation to issue temporary or permanent injunctions,
5 without bond, to prevent violations of this act. The court may
6 also, in a proper case, order restitution to all injured
7 consumers on such terms as justice may require.
8 (b) Whenever restitution is ordered in accordance with this
9 section and actually received by the consumer, no further
10 individual actions shall be commenced and, on motion any pending
11 action may be stayed or dismissed as justice may require.
12 Section 15. Duties of Attorney General and District
13 Attorneys.--The Attorney General shall have the power and it
14 shall be his duty to enforce this act. Each district attorney
15 shall have the power and it shall be his duty subject to the
16 general control of the Attorney General to enforce this act in
17 his district.
18 Section 16. Effect on Other Acts.--(a) This act supplements
19 the act of August 14, 1963 (P.L.1082, No.464), known as the
20 "Home Improvement Finance Act," the act of October 28, 1966 (1st
21 Sp.Sess., P.L.55, No.7), known as the "Goods and Services
22 Installment Sales Act," and the act of June 28, 1947 (P.L.1110,
23 No.476), known as the "Motor Vehicle Sales Finance Act." The
24 provisions of each act shall be construed as harmonious except
25 that in the case of any conflict the provisions of this act
26 shall control.
27 (b) In the case of conflict between the provisions of this
28 act and the provisions of the Uniform Commercial Code of
29 Pennsylvania, the provisions of this act shall control.
30 (c) Section 208 of the Home Improvement Finance Act and
19750H0170B2016 - 15 -
1 section 402 of the Goods and Services Installment Sales Act are
2 hereby repealed absolutely.
3 Section 17. Effective Date.--This act shall take effect in
4 180 days.
A7L13RZ/19750H0170B2016 - 16 -