CHAPTER 742*
CONSUMER CONTRACTS

      *Cited. 240 C. 58.

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Sec. 42-151. Definitions.
Sec. 42-152. Standard of plain language.
Sec. 42-153. Coverage.
Sec. 42-154. Liability.
Sec. 42-155. Limitations on liability.
Sec. 42-156. Exempt language.
Sec. 42-157. Rights of parties.
Sec. 42-158. Test procedures.

      Sec. 42-151. Definitions. The following definitions shall apply in this chapter:

      (a) Consumer. A "consumer" is an individual who borrows, leases, buys or obtains money, property or services under a written agreement.

      (b) Consumer contract. A written agreement is a "consumer contract," if:

      (1) A consumer enters into the agreement primarily for personal, family or household purposes; and

      (2) The agreement is one in which the consumer: (A) Borrows up to twenty-five thousand dollars or receives up to twenty-five thousand dollars in credit from a person who lends money or extends credit in the ordinary course of business; or (B) agrees to pay up to twenty-five thousand dollars to buy or lease personal property or services from a person who is acting in the ordinary course of business; or (C) leases any residential dwelling.

      (P.A. 79-532, S. 1.)

      Cited. 240 C. 58.

      Cited. 18 CA 329, 331.

      Subsec. (b):

      Cited. 240 C. 58.

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      Sec. 42-152. Standard of plain language. (a) Standard. Every consumer contract entered into after June 30, 1980, shall be written in plain language. A consumer contract is written in plain language if it meets either the plain language tests of subsection (b) or the alternate objective tests of subsection (c). A consumer contract need not meet the tests of both subsections.

      (b) Plain language tests. A consumer contract is written in plain language if it substantially complies with all of the following tests:

      (1) It uses short sentences and paragraphs; and

      (2) It uses everyday words; and

      (3) It uses personal pronouns, the actual or shortened names of the parties to the contract, or both, when referring to those parties; and

      (4) It uses simple and active verb forms; and

      (5) It uses type of readable size; and

      (6) It uses ink which contrasts with the paper; and

      (7) It heads sections and other subdivisions with captions which are in boldface type or which otherwise stand out significantly from the text; and

      (8) It uses layout and spacing which separate the paragraphs and sections of the contract from each other and from the borders of the paper; and

      (9) It is written and organized in a clear and coherent manner.

      (c) Alternate objective tests. A consumer contract is also written in plain language if it fully meets all of the following tests, using the procedures described in section 42-158:

      (1) The average number of words per sentence is less than twenty-two; and

      (2) No sentence in the contract exceeds fifty words; and

      (3) The average number of words per paragraph is less than seventy-five; and

      (4) No paragraph in the contract exceeds one hundred fifty words; and

      (5) The average number of syllables per word is less than 1.55; and

      (6) It uses personal pronouns, the actual or shortened names of the parties to the contract, or both, when referring to those parties; and

      (7) It uses no typeface of less than eight points in size; and

      (8) It allows at least three-sixteenths of an inch of blank space between each paragraph and section; and

      (9) It allows at least one-half of an inch of blank space at all borders of each page; and

      (10) If the contract is printed, each section is captioned in boldface type at least ten points in size. If the contract is typewritten, each section is captioned and the captions are underlined; and

      (11) It uses an average length of line of no more than sixty-five characters.

      (P.A. 79-532, S. 2.)

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      Sec. 42-153. Coverage. (a) Contracts covered. This chapter shall apply to all consumer contracts made, entered into or signed by the consumer in this state after June 30, 1980.

      (b) Exclusions. Mortgages, deeds of real estate, insurance policies and documents relating to securities transactions are not consumer contracts.

      (P.A. 79-532, S. 3.)

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      Sec. 42-154. Liability. Any creditor, seller or lessor which fails to comply with section 42-152 shall be liable to a consumer who is a party to the consumer contract for statutory damages of one hundred dollars plus, at the discretion of the court, an attorney's fee not to exceed one hundred dollars.

      (P.A. 79-532, S. 4.)

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      Sec. 42-155. Limitations on liability. (a) Contracts with more than one party. In any individual transaction, if there is more than one consumer who is a party to a single consumer contract, only one award of statutory damages may be made for that transaction.

      (b) Good faith. No statutory damages or attorney's fee shall be awarded under this chapter for a violation of subsection (b) of section 42-152 if the creditor, seller or lessor has attempted in good faith to comply with that subsection.

      (c) Class actions. No class action may be brought under this chapter.

      (d) Contracts prepared by the consumer. No consumer may bring an action under this chapter on a contract which the consumer prepared.

      (e) Consumer represented by attorney at signing of contract. No consumer may bring an action under this chapter on a contract, if:

      (1) The consumer was represented at the signing of the contract by an attorney; and

      (2) This fact is shown by the attorney's signed and dated statement on the contract.

      (f) Limitations on actions. No consumer may bring an action under this chapter after the contract has been fully performed. No consumer may bring an action under this chapter more than six years after the date on which the contract was last signed.

      (P.A. 79-532, S. 5.)

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      Sec. 42-156. Exempt language. (a) Required and authorized language. The use of specific language expressly required or authorized by court decision, statute, regulation or governmental agency shall not be a violation of this chapter.

      (b) Legal descriptions of real property. The use of a legal description of real property shall not be a violation of this chapter.

      (P.A. 79-532, S. 6.)

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      Sec. 42-157. Rights of parties. (a) Enforceability. A consumer contract shall remain enforceable, even though it violates this chapter.

      (b) Other consumer rights. Nothing in this chapter shall preclude a consumer from making any claim or raising any defense which would have been available to the consumer if this chapter were not in effect.

      (c) Waiver. A consumer may not waive the rights provided by this chapter, and any such waiver shall be void.

      (P.A. 79-532, S. 7.)

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      Sec. 42-158. Test procedures. Use the following procedures to determine compliance with subsection (c) of section 42-152:

      (a) Words. To count the number of words in the contract, proceed as follows:

      (1) Count every word used in the text of the contract.

      (2) Do not count words or numerals used in headings, captions, signature lines, graphs or charts.

      (3) Do not count single words or phrases used to identify the information required in a fill-in section of a contract, such as "Name" or "Address".

      (4) Count as one word a contraction, hyphenated word, numeral, symbol, or abbreviation.

      (5) Do not count words which are exempt under section 42-156.

      (b) Sentences. A sequence of words is a "sentence", if:

      (1) It expresses a complete thought; and

      (2) It contains a subject and a verb, including the implied subject "you"; and

      (3) It ends with a period. If it is an item in a list, it may end with a semicolon. If it is an introduction to a list, it may end with a colon.

      (c) Syllables. A "syllable" is a unit of spoken language consisting of one or more letters of a word, as the word is divided by any dictionary. To count the number of syllables, proceed as follows:

      (1) If there is more than one acceptable pronunciation for a word, use the one having fewer syllables.

      (2) Count abbreviations, numerals, and symbols as one-syllable words.

      (d) Paragraphs. A sequence of words is a "paragraph", if:

      (1) It consists of one or more sentences; and

      (2) It starts on a new line; and

      (3) It is separated by at least three-sixteenths of an inch of blank space from the text immediately preceding and following it.

      (e) Lists. A sequence of words is a "list", if:

      (1) Each item in the sequence is introduced by a numeral or letter; and

      (2) Each item in the sequence starts on a new line.

      (f) Length of line. (1) A printed text line does not exceed sixty-five characters if the distance between the inside left and inside right margins does not exceed the width of two and one-half alphabets of the type face being used.

      (2) A text line typed at ten characters per inch does not exceed sixty-five characters if the length of the line does not exceed six and one-half inches.

      (3) A text line typed at twelve characters per inch does not exceed sixty-five characters if the length of the line does not exceed five and one-half inches.

      (g) Average number of words per sentence. Count the total number of words and sentences in the contract, as described in this section. Then divide the number of words by the number of sentences. The result is the average number of words per sentence.

      (h) Average number of words per paragraph. Count the total number of words and paragraphs in the contract, as described in this section. Then divide the number of words by the number of paragraphs. The result is the average number of words per paragraph.

      (i) Average number of syllables per word. Count the total number of syllables and words in the contract, as described in this section. Then divide the number of syllables by the number of words. The result is the average number of syllables per word.

      (j) Special procedures for list formats. To count sentences and paragraphs if a list format is used, proceed as follows:

      (1) Examine the introduction to the list and each item in the list to see if it is a sentence or a paragraph.

      (2) Do not count as part of any sentence the words "and", "or", "if", "if and only if", or "then", if they are used to link the items of the list to each other or to the introduction.

      (3) If each item in the list is a sentence, count each as a sentence. If any item is not a sentence, count the entire list as part of the sentence and paragraph containing the introduction. Do not count an item in a list as either a sentence or a paragraph if the subject or verb appears in the introduction.

      (4) If each item in the list is a sentence but the introduction is not, count the introduction as part of the sentence containing the first item in the list.

      (5) If each item in the list is a sentence and, in addition, each item is separated by at least three-sixteenths of an inch of blank space from the sentences immediately preceding and following it, count each item as a paragraph.

      (P.A. 79-532, S. 8.)

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