Increases the monetary exclusion on the requirement of plain language in consumer contracts

BILL NUMBER:S5206

Title of bill

An act to amend the general obligations law, in relation to requirements for the use of plain language in consumer transactions

Purpose or general idea of bill

Increases the applicability of the plain language law to consumer contracts involving amounts up to $250,000

Summary of specific provisions

Section One amends the closing paragraph of subdivision a of section 5-702 of the general business law.

Section Two is the effective date.

Justification

New York state first enacted the plain language law in 1977. The statute requires "plain language" in certain written agreements to which a consumer is a party, and where the subject money, property or services are primarily used for personal, family, or household purposes. A dollar threshold was placed on the definition of "consumer contracts", making the statute only applicable to transactions valued at less than $50,000. In 1977, the $50,000 threshold covered essentially all consumer contracts. Today the $50,000 threshold may riot even cover the cost of an automobile. This bill proposes to increase the threshold to $250,000 in order to keep pace with the rate of inflation.

Since the enactment of this statute, several states have followed New York's lead and have adopted their own "plain language" statutes (Connecticut in 1980, Pennsylvania in 1993, Florida in 2003, and Minnesota in 1968). The state of California enacted their plain language law in 1988.

Prior legislative history

New Bill

Fiscal implications

None

Effective date

One hundred eighty days after becoming law.