First Substitute H.B. 194

This document includes Senate Committee Amendments incorporated into the bill on Thu, Feb 24, 2011 at 7:57 AM by rday. --> This document includes Senate 3rd Reading Floor Amendments incorporated into the bill on Tue, Mar 1, 2011 at 10:42 AM by rday. -->

Representative Johnny Anderson proposes the following substitute bill:

1 SERVICE CONTRACTS ACT AMENDMENTS
2 2011 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Johnny Anderson
5 Senate Sponsor: Daniel W. Thatcher
6
7 LONG TITLE
8 General Description:
9 This bill modifies the Service Contracts Act to address regulation of automatic
10 renewals.
11 Highlighted Provisions:
12 This bill:
13 . modifies definitions;
14 . addresses notice requirements;
15 . addresses remedy provisions; and
16 . makes technical and conforming amendments.
17 Money Appropriated in this Bill:
18 None
19 Other Special Clauses:
20 This bill takes effect on July 1, 2011.
21 Utah Code Sections Affected:
22 AMENDS:
23 15-10-102, as last amended by Laws of Utah 2006, Chapter 167
24 15-10-201, as last amended by Laws of Utah 2006, Chapter 167
25 15-10-202, as enacted by Laws of Utah 2003, Chapter 46

26
27 Be it enacted by the Legislature of the state of Utah:
28 Section 1. Section 15-10-102 is amended to read:
29 15-10-102. Definitions.
30 As used in this chapter:
31 (1) "Automatic renewal provision" means a provision under which a service contract is
32 renewed for [a] one or more specified [period] periods if:
33 (a) the renewal causes the service contract to be in effect more than six months after
34 the day of the initiation of the service contract; and
35 (b) the renewal is effective unless the consumer gives notice to the seller of the
36 consumer's intention to terminate the service contract.
37 (2) "Business consumer" means a person engaged in business S. [ for profit ] .S if the
37a person
38 enters into a service contract as part of the person's business activities.
39 [(2)] (3) (a) [Except as provided in Subsection (2)(c), "consumer"] "Consumer" means
40 a person receiving service, maintenance, or repair under a service contract.
41 (b) "Consumer" includes a representative of an association subject to:
42 (i) Title 57, Chapter 8, Condominium Ownership Act; or
43 (ii) Title 57, Chapter 8a, Community Association Act.
44 [(c) "Consumer" does not include a person engaged in business for profit if the person
45 enters into the service contract as part of the person's business activities.]
46 [(3)] (4) "Seller" means a person providing service, maintenance, or repair under a
47 service contract.
48 [(4)] (5) (a) "Service contract" means [any] a contract for service, maintenance, or
49 repair:
50 (i) in connection with [any] real property; or
51 (ii) that provides a benefit to [any] the real property.
52 (b) "Service contract" does not include a contract affecting any right, title, estate, or
53 interest in real property, including:
54 (i) a fee title interest;
55 (ii) a leasehold interest;
56 (iii) an option contract relating to real property;

57 (iv) a real estate purchase contract;
58 (v) an easement; or
59 (vi) any other real property interest governed by Title 57, Real Estate.
60 Section 2. Section 15-10-201 is amended to read:
61 15-10-201. Notice requirement.
62 (1) [A] (1) (a) Except as provided in Subsection (1)(b), a service contract may not
63 contain an automatic renewal provision unless the seller provides the consumer written notice
64 complying with Subsection (2) that informs the consumer of the automatic renewal provision.
65 S. [ (b) For a service contract with a business consumer executed on or after July 1, 2011,
66 the service contract may not contain an automatic renewal provision that exceeds 12 months
67 for each renewal unless the seller provides the consumer written notice complying with
68 Subsection (2) that informs the consumer of the automatic renewal provision. ] .S
69 (2) (a) For a service contract executed on or after July 1, 2011, S. that exceeds 12 months
69a for a renewal period, .S a seller shall provide
70 written notice of an automatic renewal provision prominently displayed on the first page of the
71 service contract.
72 [(2) (a) The] (b) In addition to complying with Subsection (2)(a), a seller shall provide
73 [the] written notice required under Subsection (1) to the consumer:
74 (i) personally;
75 (ii) by certified mail; or
76 (iii) prominently displayed on the first page of a monthly statement.
77 [(b) (i) The] (c) (i) A seller shall provide [the] written notice [required] under
78 Subsection [(1)] (2)(b):
79 (A) no later than 30 calendar days before the last day on which the consumer may give
80 notice of the consumer's intention to terminate the service contract; and
81 (B) no sooner than 90 calendar days before the last day on which the consumer may
82 give notice of the consumer's intention to terminate the service contract.
83 (ii) [The] A seller may not provide [the] written notice required under Subsection (1)
84 except:
85 (A) as provided in Subsection (2)(a); or
86 (B) during the time period described in Subsection [(2)(b)(i)] (2)(c)(i).
87 [(c) The written] (d) Written notice required under Subsection (1) shall be:

88 (i) written in clear and understandable language; and
89 (ii) printed in an easy-to-read type size and style.
90 Section 3. Section 15-10-202 is amended to read:
91 15-10-202. Remedy for violation.
92 [If] (1) Subject to Subsection (2), if a seller does not comply with Section 15-10-201
93 with respect to a service contract containing an automatic renewal provision:
94 [(1)] (a) the automatic renewal provision is void and unconscionable as a matter of
95 public policy; and
96 [(2)] (b) the service contract shall automatically renew on a month-to-month basis.
97 (2) Subsection (1) applies to an automatic renewal provision in a service contract with
98 a business consumer for which a seller does not comply with Section 15-10-201 only if the
99 service contract is executed on or after July 1, 2011.
100 Section 4. Effective date.
101 This bill takes effect on July 1, 2011.