Pennsylvania Act 2006-176 — PLAIN LANGUAGE CONSUMER CONTRACT ACT - CONTRACTUAL REQUIREMENTS

Act text

PLAIN LANGUAGE CONSUMER CONTRACT ACT - CONTRACTUAL REQUIREMENTS
                 Act of Nov. 29, 2006, P.L. 1563, No. 176             Cl. 12
                             Session of 2006
                               No. 2006-176

     SB 860

                                  AN ACT

     Amending the act of June 23, 1993 (P.L.128, No.29), entitled "An
        act requiring certain contracts to be written in plain
        language; and providing remedies and penalties," further
        providing for contractual requirements.

        The General Assembly of the Commonwealth of Pennsylvania
     hereby enacts as follows:

        Section 1.  Section 5 of the act of June 23, 1993 (P.L.128,
     No.29), known as the Plain Language Consumer Contract Act, is
     amended to read:
      Section 5.  Test of readability.
        (a)  General rule.--All consumer contracts executed after the
     effective date of this act shall be written, organized and
     designed so that they are easy to read and understand.
        (b)  Language guidelines.--In determining whether a contract
     meets the requirements of subsection (a), a court shall consider
     the following language guidelines:
            (1)  The contract should use short words, sentences and
        paragraphs.
            (2)  The contract should use active verbs.
            (3)  The contract should not use technical legal terms,
        other than commonly understood legal terms, such as
        "mortgage," "warranty" and "security interest."
            (4)  The contract should not use Latin and foreign words
        or any other word whenever its use requires reliance upon an
        obsolete meaning.
            (5)  If the contract defines words, the words should be
        defined by using commonly understood meanings.
            (6)  When the contract refers to the parties to the
        contract, the reference should use personal pronouns, the
        actual or shortened names of the parties, the terms "seller"
        and "buyer" or the terms "lender" and "borrower."
            (7)  The contract should not use sentences that contain
        more than one condition.
            (8)  The contract should not use cross references, except
        cross references that briefly and clearly describe the
        substances of the item to which reference is made.
            (9)  The contract should not use sentences with double
        negatives or exceptions to exceptions.
        (c)  Visual guidelines.--In determining whether a contract
     meets the requirements of subsection (a), a court shall consider
     the following guidelines:
            (1)  The contract should have type size, line length,
        column width, margins and spacing between lines and
        paragraphs that make the contract easy to read.
            (2)  The contract should caption sections in boldface
        type.
            (3)  The contract should use ink that contrasts sharply
        with the paper.
        (d)  Consumer restrictions.--
            (1)  A contract shall have a statement that contains the
        following:
                (i)  A general description of the property that may
            be taken or affected by reason of a security interest or
            contract if the consumer does not meet the terms of the
            contract. The statement is not required to list all
            possible exemptions. As it may apply, the following
            statement may be used: "If you do not meet your contract
            obligations, you may lose your house, the property that
            you bought with this loan, other household goods and
            furniture, your motor vehicle or money in your account
            with us."
                (ii)  Contract waivers of a consumer's rights in
            residential leases.
            (2)  If the disclosures required by the Truth in Lending
        Act (Public Law 90-321, 15 U.S.C. § 1601 et seq.) are made on
        the contract, then the statement of consumer restrictions
        shall appear immediately following these disclosures.
            (3)  The following shall apply to a contract under seal:
                (i)  The contract must include a statement
            substantially similar to the following:
            This is a contract under seal and may be enforced under
            42 Pa.C.S. § 5529(b) (relating to twenty year
            limitation).
                (ii)  Failure to include the statement under
            subparagraph (i) shall create an irrebuttable presumption
            that the parties did not intend to create an instrument
            in writing under seal.
        Section 2.  The addition of section 5(d)(3) of the act shall
     apply to contracts entered into on or after the effective date
     of this act.
        Section 3.  This act shall take effect in 180 days.

     APPROVED--The 29th day of November, A. D. 2006.

     EDWARD G. RENDELL