PRINTER'S NO. 1383
No. 1101 Session of 2001
INTRODUCED BY WAUGH, WOZNIAK, M. WHITE, HOLL, ERICKSON,
KUKOVICH, MOWERY AND SCHWARTZ, OCTOBER 9, 2001
REFERRED TO CONSUMER PROTECTION AND PROFESSIONAL LICENSURE,
OCTOBER 9, 2001
AN ACT
1 Amending the act of June 23, 1993 (P.L.128, No.29), entitled "An
2 act requiring certain contracts to be written in plain
3 language; and providing remedies and penalties," further
4 providing for contractual requirements.
5 The General Assembly of the Commonwealth of Pennsylvania
6 hereby enacts as follows:
7 Section 1. Section 5 of the act of June 23, 1993 (P.L.128,
8 No.29), known as the Plain Language Consumer Contract Act, is
9 amended to read:
10 Section 5. Test of readability.
11 (a) General rule.--All consumer contracts executed after the
12 effective date of this act shall be written, organized and
13 designed so that they are easy to read and understand.
14 (b) Language guidelines.--In determining whether a contract
15 meets the requirements of subsection (a), a court shall consider
16 the following language guidelines:
17 (1) The contract should use short words, sentences and
18 paragraphs.
1 (2) The contract should use active verbs.
2 (3) The contract should not use technical legal terms,
3 other than commonly understood legal terms, such as
4 "mortgage," "warranty" and "security interest."
5 (4) The contract should not use Latin and foreign words
6 or any other word whenever its use requires reliance upon an
7 obsolete meaning.
8 (5) If the contract defines words, the words should be
9 defined by using commonly understood meanings.
10 (6) When the contract refers to the parties to the
11 contract, the reference should use personal pronouns, the
12 actual or shortened names of the parties, the terms "seller"
13 and "buyer" or the terms "lender" and "borrower."
14 (7) The contract should not use sentences that contain
15 more than one condition.
16 (8) The contract should not use cross references, except
17 cross references that briefly and clearly describe the
18 substances of the item to which reference is made.
19 (9) The contract should not use sentences with double
20 negatives or exceptions to exceptions.
21 (c) Visual guidelines.--In determining whether a contract
22 meets the requirements of subsection (a), a court shall consider
23 the following guidelines:
24 (1) The contract should have type size, line length,
25 column width, margins and spacing between lines and
26 paragraphs that make the contract easy to read.
27 (2) The contract should caption sections in boldface
28 type.
29 (3) The contract should use ink that contrasts sharply
30 with the paper.
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1 (d) Consumer restrictions.--
2 (1) A contract shall have a statement that contains the
3 following:
4 (i) A general description of the property that may
5 be taken or affected by reason of a security interest or
6 contract if the consumer does not meet the terms of the
7 contract. The statement is not required to list all
8 possible exemptions. As it may apply, the following
9 statement may be used: "If you do not meet your contract
10 obligations, you may lose your house, the property that
11 you bought with this loan, other household goods and
12 furniture, your motor vehicle or money in your account
13 with us."
14 (ii) Contract waivers of a consumer's rights in
15 residential leases.
16 (2) If the disclosures required by the Truth in Lending
17 Act (Public Law 90-321, 15 U.S.C. § 1601 et seq.) are made on
18 the contract, then the statement of consumer restrictions
19 shall appear immediately following these disclosures.
20 (3) The following shall apply to a contract under seal:
21 (i) The contract must include a statement, signed by
22 the consumer, printed in ten-point type or larger and
23 substantially similar to the following:
24 I UNDERSTAND THAT I AM SIGNING A CONTRACT UNDER SEAL.
25 ACTIONS TO ENFORCE A CONTRACT UNDER SEAL MAY BE COMMENCED
26 AT ANY TIME WITHIN A PERIOD OF 20 YEARS AFTER FAILING TO
27 PERFORM ANY PROMISE THAT FORMS ALL OR PART OF THE
28 CONTRACT.
29 (ii) Failure to include the signed statement under
30 subparagraph (i) shall create an irrebuttable presumption
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1 that the parties did not intend to create an instrument
2 in writing under seal.
3 Section 2. The addition of section 5(d)(3) of the act shall
4 apply to contracts entered into on or after the effective date
5 of this act.
6 Section 3. This act shall take effect in 60 days.
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