§ 501 — Form

New York § 501

• Jurisdiction: New York
• Law PEP: Personal Property
• Art. 11: Rental Purchase Agreements

Text

§ 501. Form. 1. A rental-purchase agreement must be written in plain\nEnglish and in any other language used by the merchant in an\nadvertisement related to the rental-purchase agreement. Numerical\namounts must be stated in figures.\n 2. Disclosures required by this section must be printed or typed in\neach rental-purchase agreement in a size equal to at least ten-point\nbold-faced type.\n 3. A rental-purchase agreement may not contain a provision:\n (a) requiring a confession of judgment;\n (b) authorizing a merchant or an agent of the merchant to commit a\nbreach of the peace in the repossession of merchandise;\n (c) waiving a defense, counterclaim, or right the consumer may have\nagainst the merchant or an agent of the merchant;\n (d) requiring the purchase of insurance from the merchant to cover the\nmerchandise;\n (e) requiring the payment of a late charge or reinstatement fee unless\na periodic payment is delinquent for more than three days for agreements\nthat are renewed on week by week terms and seven days for agreements\nthat are renewed on month by month terms, and the charge or fee is in an\namount not more than the greater of ten percent of the delinquent amount\nor three dollars for agreements that are renewed on week by week terms\nand not more than the greater of ten percent of the delinquent amount or\nfive dollars for agreements that are renewed on month by month terms. In\nthe event that multiple items are leased to a consumer pursuant to more\nthan one rental-purchase agreement, any late fee imposed pursuant to\nthis section shall not exceed ten percent of the total of the periodic\npayments that are delinquent.\n (f) requiring a payment in addition to regular periodic payments in\norder to acquire ownership of the merchandise or requiring periodic\npayments totalling more than the cost to acquire ownership, as provided\nin section five hundred three of this article.\n 4. Only one late charge or reinstatement fee may be assessed for a\ndelinquent periodic payment regardless of the period during which it\nremains in default. No merchant shall assess a late charge for a\nperiodic payment made in full on its due date or within three days for\nagreements that are renewed on week by week terms or seven days for\nagreements that are renewed on month by month terms when the only\ndelinquency is attributable to late fees assessed on earlier periodic\npayments. With respect to payments accepted by mail or by store deposit\nbox, no merchant shall assess a late fee for payments which are\npost-marked or received before the expiration of the applicable\ndelinquency periods.\n 5. A rental-purchase agreement must provide that:\n (a) a charge in addition to periodic payments, if any, must be\nreasonably related to the cost of a service performed;\n (b) a consumer who fails to make a timely payment may reinstate an\nagreement without losing rights or options previously acquired and\nwithout incurring any charges, other than rental charges for the time he\npossessed the property, except for those charges provided for in\nparagraph (e) of subdivision three of this section by making the\nrequired payment before the later of seven days or half the number of\ndays in a regular payment period after the due date of the payment;\n (c) if the merchandise is returned or voluntarily surrendered by the\nconsumer, other than through judicial process, during the applicable\nreinstatement period set forth in paragraph (b) of this subdivision, the\nconsumer's right to reinstate the agreement as set forth in paragraph\n(b) of this subdivision shall be extended for a period of not less than\none year after the date of the return of the merchandise.\n 6. This section does not prevent a merchant from attempting to\nrepossess merchandise during the reinstatement period provided in\nparagraph (b) of subdivision five of this section. The consumer's right\nto reinstate an agreement does not expire because of such a\nrepossession. If the consumer is entitled to reinstatement after\nrepossession, then, within fifteen days of the repossession, the\nmerchant shall provide written notice to the consumer of the consumer's\nright to reinstate the agreement pursuant to paragraph (c) of\nsubdivision five of this section. On reinstatement, the merchant shall\nprovide the consumer with the same merchandise or substitute merchandise\nof comparable quality and condition. If substitute merchandise is\nprovided, the merchant shall provide the consumer with the disclosures\nrequired in subdivision seven of this section.\n 7. (a) Every rental-purchase agreement shall be contained in a single\ndocument which shall set forth all of the agreements of the merchant and\nthe consumer with respect to the rights and obligations of each party.\nEvery rental-purchase agreement shall clearly and conspicuously disclose\nall of the following:\n (1) the names of the merchant and the consumer, the merchant's\nbusiness address and telephone number, the consumer's address, the date\non which the agreement is executed, and a description of the merchandise\nsufficient to identify it;\n (2) whether the merchandise subject to the rental-purchase agreement\nis new or used, provided, however that it shall not be a violation of\nthis section to indicate that the merchandise is used if it is actually\nnew;\n (3) the minimum period for which the consumer is obligated under the\nrental-purchase agreement; the duration of the rental-purchase agreement\nif all regularly scheduled periodic payments are made, designated as the\n"rental period"; and the amount of each periodic payment;\n (4) the total of payments and the total number of periodic payments\nnecessary to acquire ownership of the merchandise if the renter makes\nall regularly scheduled periodic payments;\n (5) the cash price of the merchandise subject to the rental purchase\nagreement;\n (6) the cost of rental;\n (7) the amount and purpose of any other payment or fee in addition to\nthose specified pursuant to subparagraphs three and four of this\nparagraph, including any late payment fee;\n (8) a statement that the total number and dollar amount of payments\nnecessary to acquire ownership of the rental merchandise disclosed under\nsubparagraph four of this paragraph does not include other fees, such as\nlate payment fees, and that the consumer should read the rental-purchase\nagreement for an explanation of any applicable additional fees;\n (9) whether the consumer is liable for loss or damage to the\nmerchandise and, if so, the maximum amount for which the consumer may be\nliable, which in the case of loss shall in no event be greater than the\nprice the consumer would have paid to exercise an early purchase option\npursuant to this article. In the case of damage to the merchandise,\nother than normal wear and tear the consumer shall be liable for the\nlesser of the price the consumer would have paid to exercise an early\npurchase option pursuant to this article or the cost of the repair as\ndetermined by the merchant;\n (10) that the consumer does not acquire ownership rights unless the\nconsumer has complied with the ownership terms of the agreement;\n (11) the following notice:\n NOTICE\n You are renting this merchandise. You will not own it until you make\nall of the regularly scheduled payments or you use the early purchase\noption.\n You do not have the right to keep the merchandise if you do not make\nrequired payments or do not use the early purchase option. If you miss a\npayment, the merchant can repossess the merchandise, but, you may have\nthe right to the return of the same or similar merchandise.\n See the contract for an explanation of your rights.\n(12) a statement of the consumer's right to acquire ownership as\nprovided in section five hundred four of this article, including\nsubstantially the following statement: "The attached chart shows the\namount required to exercise your early purchase option after each\nrenewal payment, assuming you make each periodic payment on time." The\nrental-purchase agreement shall be accompanied by a chart showing the\namount required to exercise the consumer's early purchase option after\neach periodic payment if payments are made as scheduled;\n (13) a description of the consumer's reinstatement rights as provided\nin subdivision five of this section;\n (14) a description of the consumer's right to lower periodic payment\namounts as provided in section five hundred four-a of this article.\n (15) if warranty coverage is transferable to a consumer who acquires\nownership of the merchandise, a statement that the unexpired portion of\nall warranties provided by the manufacturer, distributor, or seller of\nthe merchandise that is the subject of the rental-purchase agreement\nwill be transferred by the merchant to the consumer at the time the\nconsumer acquires ownership of the merchandise from the merchant; and\n (16) a description of the merchant's obligation to maintain the rental\nmerchandise and to repair or replace rental merchandise that is not\noperating properly, as provided in section five hundred four-b of this\narticle.\n (b) (1) The disclosures required by subparagraphs three, four, five,\nand six of paragraph (a) of this subdivision shall be printed in at\nleast ten-point boldfaced type or capital letters if typed and shall be\ngrouped together in a box formed by a heavy line in the following form:\n________________________________________________________________________\nTOTAL OF COST OF RENTAL CASH PRICE\nPAYMENTS\n$ $ $\nYou must pay Amount over Merchandise available\nthis amount to cash at this\nown the price you will price for cash from\nmerchandise if pay if the merchant. See\nyou make all you make all about your\nthe regular regular early purchase\npayments. payments. option rights.\nYou can buy\nthe merchandise\nfor less\nunder the\nearly\npurchase\noption.\n________________________________________________________________________\n AMOUNT OF NUMBER RENTAL\n EACH PAYMENT OF PERIOD\n PAYMENTS\n $\n per\n _______________\n (insert period)\n________________________________________________________________________\n (2) The box described in subparagraph one of this paragraph shall\nappear immediately above the space reserved for the consumer's\nsignature.\n (c) The disclosures required by subparagraphs three, four, five, and\nsix of paragraph (a) of this subdivision shall be grouped together in a\nbox formed by a heavy line in the form prescribed in paragraph (b) of\nthis subdivision and shall be clearly and conspicuously placed on a tag\nor sticker affixed to the merchandise available for rental-purchase. If\nthe merchandise available for rental-purchase is not displayed at the\nmerchant's place of business but appears in a photograph or catalog\nshown to consumers, a tag or sticker shall be affixed to the photograph\nof the merchandise or catalog shown to consumers or shall be given to\nconsumers. The disclosure required by subparagraph two of paragraph (a)\nof this subdivision also shall be clearly and conspicuously placed on\nthe tag or sticker. The provisions of this paragraph shall not apply to\nphotographic depictions of merchandise that comply with the provisions\nof section five hundred five of this article.\n (d) All disclosures required by this subdivision shall be printed or\ntyped in a color or shade that clearly contrasts with the background.\n 8. (a) (1) Subject to federal law and regulation, no rental-purchase\nagreement shall contain a mandatory arbitration clause. Nothing\ncontained herein shall be construed to prohibit a merchant from\nincorporating a provision within such contract that such merchant agrees\nthat the decision of the arbitrator or panel of arbitrators shall be\nfinal in its application to such merchant and not subject to court\nreview.\n (2) The provisions of a mandatory arbitration clause shall be null and\nvoid but shall not constitute a violation of this article. The inclusion\nof such clause in a rental-purchase agreement shall not serve to impair\nthe enforceability of any other provision of such contract.\n (b) For the purposes of this subdivision the following terms shall\nhave the following meaning:\n (1) "mandatory arbitration clause" shall mean a term or provision\ncontained in a rental-purchase agreement which requires the consumer to\nsubmit any controversy thereafter arising under such agreement to\narbitration prior to the commencement of any legal action to enforce the\nprovisions of such agreement and which also further provides language to\nthe effect that the decision of the arbitrator or panel of arbitrators\nin its application to the consumer shall be final and not subject to\ncourt review.\n (2) The term "arbitration" shall mean the use of a decision making\nforum conducted by an arbitrator or panel of arbitrators within the\nmeaning and subject to the provisions of article seventy-five of the\ncivil practice law and rules.\n