Senate Bill S4996

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4996
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                             February 14, 2025
                                ___________
 
 Introduced  by Sen. HARCKHAM -- read twice and ordered printed, and when
   printed to be committed to the Committee on Consumer 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-h to read as follows:
   § 349-H. 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:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02175-01-5
              

 S. 4996                             2
 
   (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
 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 SUCH INDI-
 VIDUAL'S CHOOSING CONCERNING THE MEANING OF ITS TERMS, AND DOES NOT GIVE
 THE INDIVIDUAL A REASONABLE TIME IN WHICH TO REVIEW  THE  CONTRACT  WITH
 SUCH INDIVIDUAL'S 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  SUCH EMPLOYEE'S EMPLOYER WHETHER OR NOT THE LABOR
 LAW OTHERWISE ALLOWS FOR SUCH CLAIMS.
   § 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.