PRINTER'S NO. 981
No. 855 Session of 1985
INTRODUCED BY KUKOVICH, DeWEESE, DALEY, IRVIS, YANDRISEVITS,
AFFLERBACH, MRKONIC, HALUSKA, HARPER, TRUMAN, BLAUM,
PRESSMANN, WAMBACH, FATTAH, LLOYD, MICHLOVIC, HERSHEY, ITKIN,
WOZNIAK, DAWIDA, NAHILL, JOSEPHS, LASHINGER, PRATT, DEAL,
PISTELLA, DeLUCA, BUSH, VEON, LEVDANSKY, BALDWIN, COLAFELLA,
BELARDI, TIGUE, COWELL, JACKSON, GALLAGHER, DAVIES,
D. R. WRIGHT, OLIVER, BELFANTI, COHEN AND VAN HORNE,
APRIL 15, 1985
REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, APRIL 15, 1985
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
15 Assembly wants to promote the writing of consumer contracts in
1 plain language. This act will protect consumers from making
2 contracts that they do not understand. It will help consumers to
3 know better their rights and duties under those contracts.
4 Section 3. Definitions.
5 The following words and phrases when used in this act shall
6 have the meanings given to them in this section unless the
7 context clearly indicates otherwise:
8 "Consumer." Any individual who borrows, buys, leases or
9 obtains credit, money, services or property under a consumer
10 contract.
11 "Consumer contract" or "contract." A written agreement
12 between a consumer and a party acting in the usual course of
13 business, made primarily for personal, family or household
14 purposes in which a consumer does any of the following:
15 (1) Borrows money.
16 (2) Buys, leases or rents personal property, real
17 property or services for cash or on credit.
18 (3) Obtains credit.
19 Section 4. Application of act; interpretation.
20 (a) General rule.--This act applies to all contracts that
21 are made, solicited or intended to be performed in this
22 Commonwealth.
23 (b) Exclusions.--This act does not apply to the following:
24 (1) Property descriptions in deeds and mortgages, real
25 estate certificates of title and title insurance contracts.
26 (2) Contracts to buy securities.
27 (3) Contracts of insurance.
28 (4) Consumer contracts involving amounts of more than
29 $50,000. However, no dollar limit shall apply to consumer
30 contracts involving real estate.
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1 (c) Interpretation.--This act must be liberally interpreted
2 to protect consumers.
3 Section 5. Test of readability.
4 (a) General rule.--All consumer contracts executed after the
5 effective date of this act shall be written, organized and
6 designed so that they are easy to read and understand.
7 (b) Language guidelines.--In determining whether a contract
8 meets the requirements of subsection (a), a court or the
9 Attorney General shall consider the following language
10 guidelines:
11 (1) The contract should use short words, sentences and
12 paragraphs as much as possible.
13 (2) It should use active verb forms as much as possible.
14 (3) It should not use technical legal terms, other than
15 commonly understood legal terms, such as "mortgage" and
16 "warranty."
17 (4) It should not use Latin and foreign words or any
18 other word whenever its use requires reliance upon an
19 obsolete meaning.
20 (5) If the contract defines words, the words should be
21 defined by using commonly understood meanings.
22 (6) When the contract refers to the parties to the
23 contract, the reference should use personal pronouns, the
24 actual or shortened names of the parties, the terms "seller"
25 and "buyer" or the terms "lender" and "borrower."
26 (7) It should not use sentences that contain more than
27 one condition.
28 (8) It should not use cross references, except cross
29 references that briefly and clearly describe the substances
30 of the item to which reference is made.
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1 (9) It should not use sentences with double negatives or
2 exceptions to exceptions.
3 (c) Visual guidelines.--In determining whether a contract
4 meets the requirements of subsection (a), a court or the
5 Attorney General shall consider 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 in boldface type in a
10 larger size than the type used in the rest of the contract.
11 (3) It should use ink that contrasts sharply with the
12 paper.
13 (d) Consumer restrictions highlighted.--
14 (1) A contract shall have a statement on its front page,
15 in a box, that highlights all of the following:
16 (i) A general description of the property that may
17 be taken or affected if the consumer does not meet the
18 terms of the contract. The statement is not required to
19 list all possible exemptions. As it may apply, the
20 following statement may be used: "If you do not meet your
21 contract obligations, you may lose your house, the
22 property that you bought with this loan, other household
23 goods and furniture, your motor vehicle or money in your
24 account with us."
25 (ii) Contract waivers of a consumer's rights.
26 (2) If the contract is printed, the highlighted
27 statement shall appear in a 10-point boldface type and not in
28 all capitals but shall have this caption in all capitals:
29 "PLEASE READ THIS" in a 12-point boldface type. If the
30 contract is typed, the text of the statement shall be
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1 underlined and the caption "PLEASE READ THIS" shall appear in
2 all capitals.
3 (3) If the disclosures required by the Truth-in-Lending
4 Act (15 U.S.C. § 1601 et seq.) are made on the contract, then
5 the highlighted statement of consumer restrictions shall
6 appear immediately following these disclosures.
7 Section 6. Language required by other law.
8 The use of specific language or a form required or authorized
9 by Federal or State statute, rule, regulation or an official,
10 published regulatory interpretation does not violate this act.
11 Section 7. Damages; enforcement; assurance of voluntary
12 compliance; civil penalties.
13 (a) Damages and other remedies.--Any creditor, lessor or
14 seller who does not comply with the test of readability set
15 forth in section 5 is liable to that consumer for all of the
16 following items:
17 (1) Out-of-pocket expenses.
18 (2) Statutory damages of $100. If the total amount of
19 the contract is less than $100, these damages are limited to
20 the total amount of the contract.
21 (3) Court costs.
22 (4) Any equitable and other relief ordered by the court.
23 (b) Enforcement.--The Attorney General or a district
24 attorney may bring a lawsuit in the name of the Commonwealth
25 against any person to enforce this act. The Attorney General or
26 a district attorney may seek equitable and legal relief,
27 including the stopping of violations of the act, the recovery of
28 money lost by consumers and statutory damages.
29 (c) Assurance of voluntary compliance.--The Attorney General
30 or a district attorney may also accept an assurance of voluntary
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1 compliance as to any suspected violation of this act from any
2 person who has done or was about to do the act suspected to be a
3 violation. The assurance may include an agreement to give back
4 any money or property belonging to a consumer. The assurance
5 shall be in writing and shall be filed with the Commonwealth
6 Court or the court of common pleas of the judicial district
7 where the suspected violator resides, has his main place of
8 business or is doing business. When filed, the assurance has the
9 same effect as a court order. The assurance is not an admission
10 of a violation for any purpose.
11 (d) Civil penalties.--If any person violates the provisions
12 of an injunction granted in a lawsuit brought by the Attorney
13 General or a district attorney or the provisions of an assurance
14 of voluntary compliance properly filed in court, this person is
15 liable to the Commonwealth for a civil penalty of not more than
16 $5,000 for each violation. For the type of cases described in
17 this subsection, the court which granted the injunction, or in
18 which the assurance of voluntary compliance was filed, shall
19 retain jurisdiction over the case, and the subject matter of the
20 case may be reviewed again because the case shall not be
21 considered finished. In this type of case, the Attorney General,
22 or the appropriate district attorney, may petition to the court
23 for recovery of civil penalties and any other equitable relief
24 which is necessary or proper.
25 Section 8. Limitations on liability.
26 (a) Limitations generally.--There shall be no liability
27 under section 7 if any of the following occur:
28 (1) All parties have finished what was required under
29 the contract.
30 (2) The consumer wrote the contract or the part of it
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1 that violates this act.
2 (3) The creditor, seller or lessor shows by a
3 preponderance of the evidence that its violation of the act
4 was not intentional and that it attempted in good faith to
5 comply with this act. The violation must have happened in
6 spite of the use of reasonable procedures that were designed
7 to avoid this type of violation.
8 (4) The Attorney General has certified that the contract
9 complies with this act.
10 (b) Time limit for starting a lawsuit.--A lawsuit under this
11 act must be started within four years from the date on which the
12 contract was last signed.
13 (c) Contract validity.--A violation of this act will not
14 void a contract.
15 Section 9. Review by Attorney General.
16 (a) Advisory opinion.--A creditor, seller, lessor or any
17 person who prepares and sells consumer contract forms may
18 request an opinion from the Attorney General on compliance with
19 this act. The Attorney General shall furnish the opinion within
20 a reasonable period of time. The Bureau of Consumer Protection
21 shall perform the review of contracts under this act for the
22 Attorney General. The bureau will begin to accept these
23 contracts for review within nine months of the effective date of
24 this act.
25 (b) Determining compliance.--The Attorney General shall
26 apply the test of readability set forth in section 5.
27 (c) Review.--After reviewing the contract, the Attorney
28 General may:
29 (1) certify that the contract complies with this act;
30 (2) decline to certify that the contract complies with
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1 this act and note his objections to the contractual language;
2 (3) decline to issue an opinion on the contract because
3 its compliance with this act is the subject of pending
4 litigation; or
5 (4) decline to issue an opinion on the contract because
6 the contract is not subject to this act.
7 (d) Compliance.--Any consumer contract certified under this
8 section complies with this act. Certification of a contract
9 under this section does not constitute a certification that the
10 contract meets other legal requirements.
11 (e) Good faith.--The failure of a creditor, lessor or seller
12 to submit a contract to the Attorney General for review under
13 this section does not show a lack of good faith and does not
14 create a presumption that the contract violates this act.
15 (f) Fee.--The Attorney General may charge a reasonable fee
16 to persons who submit contracts for review under this act.
17 Section 10. Waiver of rights invalid.
18 A consumer cannot waive the rights given by this act. Any
19 waiver is void, not just voidable.
20 Section 11. Other rights and remedies preserved.
21 The rights and remedies under this act are in addition to any
22 other legal rights, remedies, claims and defenses.
23 Section 12. Severability.
24 The provisions of this act are severable. If any provision of
25 this act or its application to any person or circumstance is
26 held invalid, the invalidity shall not affect other provisions
27 or applications of this act which can be given effect without
28 the invalid provision or application.
29 Section 13. Effective date.
30 This act shall take effect in one year.
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