N.Y. General Business Law § 394-b: Limitations on certain contracts for instruction or use of physical or social training facilities

§ 394-b. Limitations on certain contracts for instruction or use of

physical or social training facilities. 1. (a) "Total contract price"

shall mean the total cash price paid or to be paid by the buyer for

instruction or services which are the subject of the written contract.

(b) "Notice of cancellation" shall be deemed to have been provided by

a buyer by mailing or delivering written notification to cancel the

contract to the seller or by failing to attend instructional facilities

for a period of five consecutive appointment days on which classes or

the provisions of services which are the subject of the contract were

prearranged with the buyer.

(c) "Reasonable and fair service fee" shall mean no more than ten

percent of the total contract price for contracts of one thousand

dollars and under. For contracts over one thousand dollars, reasonable

and fair service fee shall mean no more than one hundred dollars plus an

amount equal to five percent of the total contract price over one

thousand dollars, not to exceed two hundred fifty dollars.

(d) "Initial contract" shall mean the buyers first contract for

services. Subsequent contracts shall be referred to as renewals.

Contracts for services which are entered into, after a lapse of

contractual service for a period of twelve consecutive months, shall be

deemed to be initial contracts.

2. Any contract for instruction in physical or social skills, or for

the use by an individual patron of a dance hall studio, ballroom, or

other physical or other social training facility, which is measured by

the life of the person receiving such instruction or the use of such

physical or social training facility as an individual patron, shall be

deemed void and unenforceable as contrary to public policy.

3. Any initial contract for instruction in physical or social skills,

or for the use by an individual patron of a dance hall studio, ballroom,

or other physical or social training facility which requires payment by

the person receiving such instruction, or the use of such physical or

social training facilities, of a total amount in excess of five hundred

dollars, or granting to the person furnishing such instruction or

providing the use of such facilities, an automatic renewal option where

the payments to be made during the original contract period and the

option period combined are in excess of five hundred dollars, shall be

valid and enforceable only if: (a) The term of the contract shall be for

a precisely measured period of years, or any definite part thereof; and

(b) the payments to be made thereunder shall be in instalments so

computed that the total amounts so paid shall not exceed by more than

five percent the prorated cost of the units of instruction or use

actually received thereunder at the time the latest payment is made; or,

if no definite number of units of instruction or use is specified in the

contract, the total amount so paid shall not exceed by more than five

percent the proportion of the total contract price that the expired

portion of the entire term bears to the whole term of the contract.

4. No contract for services shall be assigned without written consent

of the person receiving such instruction or for the use of such physical

or social training facility.

5. (a) Every contract for services shall provide that such contract

may be canceled at any time. Notice of cancellation shall be delivered

or mailed by certified or registered United States mail at the address

specified in the contract. Such contract shall contain the following

written information in at least ten point type: "CONSUMERS RIGHT TO

CANCELLATION. YOU MAY CANCEL THIS CONTRACT AT ANY TIME BY DELIVERING OR

MAILING BY CERTIFIED OR REGISTERED UNITED STATES MAIL TO THE ADDRESS

SPECIFIED IN THE CONTRACT. IF YOU CANCEL THE CONTRACT WITHIN THREE (3)

DAYS FROM THE DATE OF RECEIPT, YOU WILL BE ENTITLED TO A FULL REFUND. TO

CANCEL A CONTRACT WITHIN THREE (3) DAYS FROM THE DATE OF RECEIPT BY

REGISTERED OR CERTIFIED MAIL, SUCH MAIL MUST BE POSTMARKED WITHIN THE

THREE (3) DAY PERIOD. AFTER THE THREE (3) DAY PERIOD, YOU MAY BE

ASSESSED A REASONABLE AND FAIR SERVICE FEE. IF YOU UTILIZED SERVICES AND

SUBSEQUENTLY CANCEL THE CONTRACT, YOU WILL BE CHARGED ONLY FOR

INSTRUCTION SERVICES ACTUALLY FURNISHED AND A REASONABLE AND FAIR

SERVICE FEE, AS DEFINED IN PARAGRAPH (C) OF SUBDIVISION 1 OF SECTION

394-B OF THE GENERAL BUSINESS LAW. A BREACH OF THIS PROVISION SHALL

SUBJECT THE SELLER TO PAY DAMAGES UP TO TWICE THE AMOUNT OF THE ACTUAL

DAMAGES PLUS REASONABLE ATTORNEYS FEES." The provisions of this

paragraph shall be specifically set forth in every contract for

services; or in the event that such provisions are omitted therefrom,

they shall be deemed a part of such contract by operation of law and

shall be enforceable as though fully set forth therein.

(b) All moneys paid pursuant to such contract shall be refunded within

thirty business days of receipt of such notice of cancellation. If the

buyer has executed any credit or loan agreement to pay for all or part

of the service, any such negotiable instrument executed by the buyer

shall also be returned within thirty days. Any buyer who cancels such

contract within three days of execution shall be entitled to a full

refund. After the three day time frame, a seller may assess a reasonable

and fair service fee. In addition, the prorated cost of any instruction

provided may be deducted out of the refund amount.

(c) If a buyer fails to attend instructional facilities for a period

of five consecutive appointment days on which classes for the provision

of services which are the subject of the contract were prearranged with

the buyer, the contract shall be deemed to be canceled, unless the buyer

otherwise provides written consent to maintain the contract. All monies

shall be refunded pursuant to paragraph (b) of this subdivision,

however, the instructional facility may withhold monies to cover the

prorated cost of the prearranged instructional services in which the

buyer failed to attend.

6. Nothing herein shall be construed to apply to contracts for

instruction at schools operating pursuant to the provisions of the

education law.

7. This section shall apply to all contracts to be executed or renewed

after May first, nineteen hundred sixty-four.

8. Any contract for services which is inconsistent with the applicable

provisions of this section and any waiver by the buyer of the provisions

of this section shall be void and unenforceable as contrary to public

policy.

9. Nothing in this section shall be construed so as to nullify or

impair any right or rights which a buyer may have against a seller at

common law, by statute, or otherwise.

10. In addition to the remedies hereinbefore provided, the attorney

general may bring an action on behalf of the people of the state to

restrain further violations of this section, to enforce the provisions

of this section and for such other relief as may be appropriate.

11. No provision of this section shall be deemed to restrict the

authority of any county, city, town or village to enact and enforce

additional laws, ordinances or codes, or portions thereof, provided the

provisions thereof are not inconsistent with the provisions of this

section.