1. The Laws of New York
  2. Consolidated Laws
  3. Personal Property
  4. Article 10: Retail Instalment Sales Act


Section 402 Provisions of retail instalment contracts and obligations

Personal Property (PEP)

1. A retail instalment contract or obligation shall be dated and in writing; the printed portion thereof shall be in at least eight point type.

  2. A contract or obligation shall contain the entire agreement of the parties with respect to the goods and services, including any promise, whether made in writing or orally, by the seller, made as an inducement to the buyer to become a party to the contract or which is part of the contract or which is made incidental to negotiations between the seller and the buyer with respect to the sale of the goods or services that are the subject of the contract, that the seller will compensate the buyer for referring customers or prospective customers to the seller for goods or services which the seller has for sale or for referring the seller to such customers or prospective customers. In any case in which, pursuant to the preceding provisions, the contract contains a promise to compensate the buyer for referring customers or prospective customers to the seller or the seller to such customers, the contract must contain a provision to the effect that the amount otherwise owing under the contract at any time is reduced by the amount of compensation owing pursuant to such promise, and:

  (a) Both at the top of the contract or obligation and directly above the space reserved for the signature of the buyer, the words RETAIL INSTALMENT CONTRACT or RETAIL INSTALMENT OBLIGATION, as the case may be, in at least ten point bold type; and

  (b) Either a notice in at least eight point bold type reading as follows: NOTICE TO THE BUYER: 1. Do not sign this agreement before you read it or if it contains any blank space. 2. You are entitled to a completely filled in copy of this agreement. 3. Under the law, you have the right to pay off in advance the full amount due and under certain conditions to obtain a partial refund of the credit service charge or a notice in at least eight point bold type reading as follows: NOTICE TO THE BUYER: 1. Do not sign this agreement before you read it or if it contains any blank space. 2. You are entitled to a completely filled in copy of this agreement. 3. Under the law, you have the right to pay off in advance the full amount due. If you do so, you may, depending on the nature of the credit service charge, either: (a) prepay without penalty, or (b) under certain circumstances obtain a rebate of the credit service charge.

  3. A contract or obligation shall:

  (a) Contain the names of the seller and the buyer, the place of business of the seller, the residence or place of business of the buyer as specified by the buyer and an adequate description of the services and goods (including the make and model, if any, in the case of goods customarily sold by make and model); and

  (b) Set forth the following items:

  (1) All items required to be disclosed by the act of congress entitled "Truth in Lending Act" and the regulations thereunder, as such act and regulations may from time to time be amended;

  (2) If any instalment substantially exceeds in amount any prior instalment other than the down-payment, contain the following legend printed in ten point bold type or typewritten: THIS CONTRACT IS NOT PAYABLE IN INSTALMENTS OF EQUAL AMOUNTS: followed, if there be but one larger instalment, by: AN INSTALMENT OF $..........WILL BE DUE ON ..........or, if there be more than one larger instalment, by: LARGER INSTALMENTS WILL BE DUE AS FOLLOWS.........(insert the amount or amounts of every larger instalment and its due date.) In the case of a retail instalment obligation, OBLIGATION shall be substituted for CONTRACT in the required legend. If the credit service charge with respect to the contract or obligation is calculated pursuant to subdivision four of section four hundred four of this article, the disclosure provided for in this subparagraph may be omitted.

  4. No contract or obligation shall be signed by the buyer when it contains blank spaces to be filled in after it has been signed; however, if delivery of the goods is not made at the time of the execution of the contract or obligation and it so provides, the identifying numbers or marks of the goods and the due date of the first instalment may be left blank and later inserted by the seller in the seller's counterpart of the contract or obligation after it has been signed by the buyer.

  5. If the cost of any credit unemployment, group credit life or other insurance is included in the contract or obligation and a separate charge is made to the buyer for such insurance:

  (a) The contract or obligation shall state whether the insurance is to be procured by the buyer or the seller;

  (b) The amount, if any, so included for such insurance, shall not exceed the premiums chargeable in accordance with rate filings made with the superintendent of financial services for such insurance by the insurer; and, if such group credit life or other insurance is cancelled, the refund for unearned insurance premiums received or receivable by the holder of the contract, or the excess of the amount included in the contract for group credit life insurance over the premiums paid or payable by the holder of the contract therefor, together with, in either case, the unearned portion of the credit service charge applicable thereto, shall be credited to the final maturing instalments of the retail instalment contract, provided that no such credit need be made if the amount thereof would be less than one dollar; and

  (c) If the insurance is to be procured by the seller or holder, he shall, within thirty days after delivery of the goods or furnishing of the services under the contract or obligation, deliver, mail or cause to be mailed to the buyer, at his address as specified in the contract or obligation, a notice thereof or a copy of the policy or policies of insurance or a certificate or certificates of the insurance so procured.

  6. A contract or obligation may provide for the payment by the buyer of a delinquency and collection charge on each instalment in default for a period of not less than ten days in an amount not in excess of the rate provided for in the contract or obligation on such instalment provided that only one such delinquency and collection charge may be collected on any such instalment regardless of the period during which it remains in default.

  6-a. A provision in a contract or obligation which provides for the payment of attorney's fees or the costs of attorney's services incurred in a legal action or proceeding for collection shall be null and void.

  6-b. A provision in a contract or obligation which provides for waiver of the right to impose any counterclaim or offset arising out of a breach of that contract or obligation by the seller shall be void and unenforceable.

  7. All of the terms of an obligation need not be contained in a single document but if they are not then there shall be an original document executed by the parties containing provisions making it applicable to purchases of goods or services, which may not exceed a cash sale price of one hundred seventy-five dollars on each purchase, to be made by the buyer from time to time from a retail seller, which document, together with other written statements relating to the sale of such goods or services shall constitute a retail instalment obligation and shall contain the entire agreement of the parties. In such cases, the original document shall contain those items required to be disclosed by the act of congress entitled "Truth in Lending Act" and the regulations thereunder, as such act and regulations may from time to time be amended and shall further contain:

  (i) a legend as provided in paragraph (a) of subdivision two hereof,

  (ii) a notice to the buyer as provided in paragraph (b) of subdivision two hereof,

  (iii) the names of the seller and the buyer,

  (iv) the place of business of the seller and the residence or place of business of the buyer as specified by the buyer,

  (v) the number of instalment payments, and

  (vi) the amount or rate of the credit service charge applicable to purchases thereunder.

  At the time of each purchase under such document, the seller shall give the buyer statements which shall contain at the top thereof a legend in at least eight-point bold type: PART OF A RETAIL INSTALMENT OBLIGATION and an adequate description of the goods, accessories and services sold or furnished (including the make and model, if any, in the case of goods customarily sold by make and model) and shall further contain those items required to be disclosed by the act of congress entitled "Truth in Lending Act" and the regulations thereunder, as such act and regulations may from time to time be amended. If the seller does not deliver to the buyer at the time of each purchase under such original document a statement in compliance with the act of congress entitled "Truth in Lending Act" and the regulations thereunder, as such act and regulations may from time to time be amended, the seller shall promptly thereafter, and in any event within ten days from the date of such purchase, deliver, mail or cause to be mailed to the buyer at his address shown on the seller's records, such statement. Unless the seller does so, the buyer shall have an unconditional right to cancel such purchase and to receive an immediate refund of any payments made and re-delivery of all goods traded in to the seller on account of or in contemplation of such purchase; upon the written request of the buyer the seller shall prove the accuracy of the calculations in such statement.

  Such statement with respect to the first such purchase shall, combined with the original document, constitute the obligation for such purchase; and, on each succeeding purchase pursuant to such original document, the obligation therefor as represented by such original document and such statement shall constitute a subsequent obligation under section four hundred ten.