S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  10065

                          I N  A S S E M B L Y

                              May 10, 2016
                               ___________

Introduced  by M. of A. STECK -- read once and referred to the Committee
  on Consumer Affairs and Protection

AN ACT to amend the general business law, in relation to  unconscionable
  terms in standard form contracts

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The general business law is amended by adding a new section
349-f to read as follows:
  S 349-F. UNCONSCIONABLE TERMS IN STANDARD FORM CONTRACTS.  1.    FIND-
INGS.  THE  INCLUSION OF UNCONSCIONABLE TERMS IN STANDARD FORM CONTRACTS
REGARDING DISPUTE RESOLUTION IS UNFAIR NOT ONLY  BECAUSE  ANY  RESULTING
DISPUTE  RESOLUTION PROCEEDING IS UNFAIR TO THE PARTY FORCED TO AGREE TO
THE UNCONSCIONABLE TERMS, BUT  ALSO  BECAUSE  THE  UNCONSCIONABLE  TERMS
DISCOURAGE  VALID  CLAIMS.  FURTHERMORE,  WHEN  THE PROVISIONS ARE CHAL-
LENGED, COURTS MAY SIMPLY STRIKE THE UNCONSCIONABLE  TERMS  BUT  ENFORCE
THE  REMAINDER  OF  THE  AGREEMENT  REGARDING  DISPUTE  RESOLUTION. AS A
RESULT, BUSINESSES HAVE LITTLE INCENTIVE NOT  TO  INCLUDE  THESE  TERMS.
FURTHERMORE,  IT IS UNLIKELY THAT THERE IS ANY MEETING OF THE MINDS OVER
A DISPUTE-RESOLUTION AGREEMENT THAT DOES NOT INCLUDE SEVERED UNCONSCION-
ABLE TERMS.
  2.   DEFINITION. FOR THE PURPOSES  OF  THIS  SECTION,  "STANDARD  FORM
CONTRACT" SHALL MEAN ANY CONTRACT TO WHICH ONLY ONE OF THE PARTIES IS AN
INDIVIDUAL  AND THAT INDIVIDUAL DOES NOT DRAFT THE CONTRACT. IN ORDER TO
BE A STANDARD FORM CONTRACT, THE DOCUMENT CONSTITUTING THE CONTRACT NEED
NOT BE A PREPRINTED FORM NOR NEED IT CONTAIN LANGUAGE COMPLETELY IDENTI-
CAL TO ANY OTHER CONTRACT.
  3. UNCONSCIONABLE TERMS. THERE IS A REBUTTABLE  PRESUMPTION  THAT  THE
FOLLOWING   CONTRACTUAL  TERMS  ARE  SUBSTANTIVELY  UNCONSCIONABLE  WHEN
INCLUDED IN A STANDARD FORM CONTRACT TO WHICH ONLY ONE OF THE PARTIES TO
THE CONTRACT IS AN INDIVIDUAL AND THAT INDIVIDUAL  DOES  NOT  DRAFT  THE
CONTRACT:
  (A)  A  REQUIREMENT  THAT RESOLUTION OF LEGAL CLAIMS TAKES PLACE IN AN
INCONVENIENT VENUE. AN "INCONVENIENT VENUE" IS, FOR  PURPOSES  OF  STATE
LAW  CLAIMS,  A PLACE OTHER THAN THE COUNTY WHERE THE INDIVIDUAL RESIDES

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD14425-02-6

A. 10065                            2

OR THE CONTRACT WAS CONSUMMATED, AND FOR PURPOSES OF FEDERAL LAW CLAIMS,
A PLACE OTHER THAN THE FEDERAL JUDICIAL DISTRICT  WHERE  THE  INDIVIDUAL
RESIDES OR THE CONTRACT WAS CONSUMMATED;
  (B)  A WAIVER OF THE INDIVIDUAL'S RIGHT TO ASSERT CLAIMS OR SEEK REME-
DIES PROVIDED BY STATE OR FEDERAL STATUTE;
  (C) A WAIVER OF THE INDIVIDUAL'S RIGHT TO  SEEK  PUNITIVE  DAMAGES  AS
PROVIDED BY LAW;
  (D)  A  REQUIREMENT  THAT  THE INDIVIDUAL BRING AN ACTION PRIOR TO THE
EXPIRATION OF THE APPLICABLE STATUTE OF LIMITATIONS;
  (E) A REQUIREMENT THAT THE INDIVIDUAL PAY FEES AND COSTS  TO  BRING  A
LEGAL  CLAIM  SUBSTANTIALLY  IN  EXCESS  OF THE FEES AND COSTS THAT THIS
STATE'S COURTS REQUIRE TO BRING SUCH A STATE LAW CLAIM OR  THAT  FEDERAL
COURTS REQUIRE TO BRING SUCH A FEDERAL LAW CLAIM; AND
  (F)  THE  CONTRACT  DOES  NOT ADVISE THE INDIVIDUAL THAT IT IS A LEGAL
DOCUMENT, THAT THE INDIVIDUAL SHOULD CONSULT WITH COUNSEL OF HIS OR  HER
CHOOSING  CONCERNING  THE  MEANING  OF  ITS TERMS, AND DOES NOT GIVE THE
INDIVIDUAL A REASONABLE TIME IN WHICH TO REVIEW THE CONTACT WITH HIS  OR
HER COUNSEL.
  4.  RELATION TO COMMON LAW AND THE UNIFORM COMMERCIAL CODE.  IN DETER-
MINING WHETHER THE TERMS DESCRIBED IN SUBDIVISION THREE OF THIS  SECTION
ARE  UNENFORCEABLE,  A COURT SHALL CONSIDER THE PRINCIPLES THAT NORMALLY
GUIDE COURTS IN THIS STATE IN DETERMINING WHETHER  UNCONSCIONABLE  TERMS
ARE ENFORCEABLE. ADDITIONALLY, THE COMMON LAW AND THE UNIFORM COMMERCIAL
CODE  SHALL  GUIDE  COURTS  IN  DETERMINING THE ENFORCEABILITY OF UNFAIR
TERMS NOT SPECIFICALLY IDENTIFIED IN SUCH SUBDIVISION.
  5. SEVERABILITY. THERE IS A REBUTTABLE PRESUMPTION THAT A  TERM  IN  A
STANDARD FORM CONTRACT THAT IS FOUND TO BE UNCONSCIONABLE IS NOT SEVERA-
BLE  FROM  THE AGREEMENT IN WHICH IT IS SITUATED. IN DETERMINING WHETHER
THIS PRESUMPTION HAS BEEN REBUTTED COURTS SHOULD CONSIDER GENERAL  STATE
LAW PRINCIPLES REGARDING THE SEVERABILITY OF UNENFORCEABLE TERMS.
  6.  UNFAIR  AND DECEPTIVE ACT AND PRACTICE. IT IS AN UNFAIR AND DECEP-
TIVE PRACTICE IN VIOLATION OF SECTION THREE HUNDRED FORTY-NINE  OF  THIS
ARTICLE TO INCLUDE ONE OF THE PRESUMPTIVELY-UNCONSCIONABLE TERMS IDENTI-
FIED IN SUBDIVISION THREE OF THIS SECTION IN A STANDARD FORM CONTRACT TO
WHICH  ONLY ONE OF THE PARTIES TO THE CONTRACT IS AN INDIVIDUAL AND THAT
INDIVIDUAL DOES NOT DRAFT  THE  CONTRACT.    NOTWITHSTANDING  ANY  OTHER
PROVISION  OF LAW TO THE CONTRARY, A PARTY WHO PREVAILS IN A CLAIM UNDER
THIS SECTION SHALL BE ENTITLED TO  ONE  THOUSAND  DOLLARS  IN  STATUTORY
DAMAGES PER VIOLATION. ADDITIONALLY, SUCH AN ACTION MAY BE MAINTAINED BY
AN  EMPLOYEE  AGAINST  HIS  OR HER EMPLOYER WHETHER OR NOT THE LABOR LAW
OTHERWISE ALLOWS FOR SUCH CLAIMS.
  S 2. This act shall take effect on the first of January next  succeed-
ing  the  date  on  which it shall have become a law, and shall apply to
contracts entered into on or after such date.