N.Y. Personal Property Law § 413: Retail instalment credit agreements

§ 413. Retail instalment credit agreements. 1. (a) A retail instalment

credit agreement shall be dated and in writing and the printed portion

thereof shall be in at least eight point type. No retail instalment

credit agreement shall be signed by the buyer when it contains blank

spaces to be filled in after it has been signed by the buyer. The

seller, before he shall be able to avail himself of the rates authorized

by subdivision three of this section, shall deliver to the buyer a copy

of the credit agreement executed by the seller.

(b) Provided that the retail installment credit agreement complies in

all other respects with the provisions of this section, a single credit

agreement may provide for a retail seller to acquire indebtedness of a

retail buyer under a sales slip or memorandum evidencing a purchase.

Where a retail seller enters into a credit agreement with a retail buyer

the credit agreement may consist of an agreement complying in all other

respects with the provisions of this section, but executed only by the

retail seller, together with a credit card issued by it to the retail

buyer. The credit agreement, however, must then provide that it shall

not become effective unless and until the retail buyer or a person

authorized by him signs a sales slip or memorandum evidencing a purchase

or lease of property or services by use of the credit card and that

prior thereto the retail buyer shall not be responsible for any purchase

or lease of property or services by use of the credit card after its

loss or theft.

2. Every retail instalment credit agreement shall contain:

(a) The entire agreement of the buyer with respect to the subject

matter of the credit agreement;

(b) The names of the seller and of the buyer, the place of business of

the seller and the residence or place of business of the buyer as

specified by the buyer;

(c) Both at the top thereof and directly above the space reserved for

the signature of the buyer, the words RETAIL INSTALMENT CREDIT AGREEMENT

in at least ten point bold type;

(d) A provision in at least eight point bold type to the effect that

the buyer may at any time pay his total indebtedness; and

(e) A notice in at least eight point bold type reading as follows:

NOTICE TO THE BUYER: 1. Do not sign this credit agreement before you

read it or if it contains any blank space. 2. You are entitled to a

completely filled in copy of this credit agreement.

3. (a) A seller may, in a retail instalment credit agreement, contract

for and, if so contracted for, the seller or holder thereof may charge,

receive and collect the service charge authorized by this article, which

service charge shall not exceed the rate or rates agreed upon by the

seller and the buyer, including, in accordance with the provisions of

the credit agreement, rates that may vary, from time to time computed,

for the purposes of this section, on the outstanding indebtedness from

month to month, or if the service charge so computed is less than

seventy cents for any month, seventy cents. If the credit agreement

provides for a variable rate of service charge, such rate shall be

determined at regular intervals as set forth in the credit agreement and

in accordance with such regulations as the superintendent of financial

services shall prescribe but said rate shall not vary more often than

once in any three month period and shall be based on a published index

that is (a) readily available, (b) independently verifiable, (c) beyond

the control of the seller and (d) approved by the superintendent, (e)

such charges in credit agreements shall be based on the index values, or

the index numbers plus or minus additional percentage points provided,

however, that variations in the charge must correspond directly to the

movements of the index values plus or minus additional percentage points

only. Once such charge is established no lending institution may add any

factors to increase the charge other than variations in the established

index without the prior approval of the superintendent of financial

services.

The superintendent of financial services shall adopt regulations with

respect to credit agreements that provide for a variable rate of service

charge, including but not limited to: (a) providing for disclosure to

the buyer by the seller of the circumstances under which the rate may

increase, any limitations on the increase, the effect of an increase and

an example of the payment terms that would result from an increase; (b)

providing for disclosure to the buyer by the seller of a history of the

fluctuations of the index over a reasonable period of time; and (c)

providing for notice to the buyer by the seller prior to any rate

increase or change in the terms of payment. The regulations shall allow

a seller, holder or financing agency after choosing an approved index to

choose a spread and a minimum and maximum rate of service charge at its

discretion. A retail instalment credit agreement, whether it provides

for a fixed or variable service charge, may provide for an introductory

rate of service charge at either a fixed or variable rate, provided that

the terms of such introductory rate, including, if applicable, the date

on which the introductory rate shall terminate, are disclosed to the

buyer. Such disclosure shall be contained on an application form or

pre-approved written solicitation as specified pursuant to subdivisions

one and one-a of section five hundred twenty of the general business

law. A change in the service charge rate upon expiration of an

introductory rate shall not be considered a variable rate or a change in

terms. The service charge rate in effect after expiration of an

introductory rate may apply to all amounts due under the credit

agreement regardless of when incurred, and disclosure of the same shall

be provided to the buyer in the written agreement.

(b) If the credit agreement so provides, the service charge may be

computed on a schedule of fixed amounts if as so computed it is applied

to all amounts of outstanding balances equal to the fixed amount minus a

differential of not more than five dollars, provided that it is also

applied to all amounts of outstanding balances equal to the fixed amount

plus at least the same differential.

(c) (i) For the purposes of this subdivision the term "outstanding

indebtedness from month to month" shall mean, at the election of the

seller, holder or financing agency either:

(a) the amount unpaid at the beginning of the monthly billing period,

including unpaid service charges, less all payments received and credits

issued during the billing period, except for credits attributable to

amounts not included in the previous balance; or

(b) an amount not to exceed the amount calculated by adding the

amounts unpaid for each day of the monthly billing period, including

unpaid service charges, after reflecting that day's purchases made,

payments received, credits issued and other adjustments, and dividing

such sum by the number of days in the billing period.

(ii) A credit agreement may not provide for the imposition of a

service charge for any monthly billing period in which there is no

previous balance or during which the sum of the payments received and

other credits issued which are attributable to amounts included in the

previous balance is equal to or exceeds the amount of such previous

balance unless the same seller also offers a credit agreement which

provides that no service charge will be imposed for any monthly billing

period in which there is no previous balance or during which the sum of

the payments received and other credits issued which are attributable to

amounts included in the previous balance is equal to or exceeds the

amount of such previous balance.

(iii) The term "billing period" as used in this subdivision shall mean

the time interval between periodic statement dates, pursuant to

subdivision four of this section. A billing period shall be considered

to be a "month" or "monthly" if the last day of each billing period is

on the same day of each month or does not vary by more than four days

therefrom.

(d) Where a retail instalment credit agreement provides that the buyer

has the option of avoiding the imposition of an additional service

charge by paying the outstanding indebtedness or any portion thereof

within a specified period of time, the additional service charge may not

be imposed unless the monthly statement showing such outstanding

indebtedness or portion thereof is mailed at least fifteen days prior to

the date by which payment must be received to avoid that service charge.

A seller or holder shall not be prohibited from imposing a service

charge, or required to refund a service charge, if failure to comply

with the provisions of this paragraph resulted from circumstances beyond

the control of the seller or holder, notwithstanding reasonable

procedures to insure compliance with this paragraph.

(e) No change in the terms of a retail instalment credit agreement

shall take effect unless at least 30 days prior to the effective date of

such change, a written notice has been mailed or delivered to the buyer

that clearly and conspicuously describes such change and the

indebtedness to which it applies, and if the change has the effect of

increasing the rate of service charge, either (a) the notice states that

the incurrence by the buyer or another person authorized by him of any

further indebtedness under the plan to which the agreement relates on or

after the effective date of such change specified in the notice shall

constitute acceptance of such change, and either the buyer agrees in

writing to such change or the buyer or another person authorized by him

incurs such further indebtedness on or after the effective date of the

change stated in the notice, or (b) the notice advises the buyer that he

has thirty days from the earlier of the mailing or delivery of the

notice to advise the seller under or holder of a retail installment

credit agreement in writing that he does not accept such change,

provided that such notice contains an address to which the buyer may

send notice of his election not to accept the change and also provided

that the notice specifies that the change will take effect absent

receipt of the buyer's written objection to the change. Any buyer who

has received a notice pursuant to clause (a) who does not agree in

writing to the change and no further indebtedness is incurred under the

plan to which the agreement relates, and any buyer who gives a timely

notice, pursuant to clause (b), electing not to accept the change shall

be permitted to pay his outstanding indebtedness in accordance with the

terms of the retail installment credit agreement but the seller or

holder may terminate the amount of credit available to the buyer and may

require the buyer to return all credit cards issued in connection with a

retail installment credit agreement. If such a buyer subsequently uses a

credit card to obtain credit under a retail installment credit

agreement, such use shall constitute acceptance of the change of terms

and shall be deemed to have been accepted and shall become effective as

to the buyer as of the date such change would have become effective but

for the giving of notice by the buyer. If notice is given pursuant to

clause (b) and the buyer does not timely object in writing to the

change, such change shall become effective without action on the part of

the buyer; provided that in no event shall any such change take effect

with respect to (i) that portion of the outstanding indebtedness from

month to month which represents indebtedness outstanding prior to

January 1, 1981, and (ii) that portion of the outstanding indebtedness

from month to month which represents indebtedness incurred, under or

pursuant to an agreement in effect on December 1, 1980, between January

1, 1981, and the effective date of such change specified in the first

notice mailed or delivered pursuant to clause (a). Indebtedness

outstanding prior to January 1, 1981 for purpose of clause (i) above and

indebtedness outstanding prior to the effective date of a change for

purposes of clause (ii) above shall be determined on the basis of

crediting payments and other credits first to that portion of any such

indebtedness representing any service charges and then to that portion

of such indebtedness representing purchases and other debits in the

order in which made. An amendment to a credit agreement deleting a

provision that the rate of service charge may vary from time to time may

not become effective within one year from the later of the effective

date of the credit agreement or the effective date of an amendment to

the credit agreement adding a variable rate provision. For purposes of

this paragraph, an adjustment in the rate of the service charge as a

consequence of the movement in the selected index shall not constitute a

change in the terms of that agreement. A reduction in the grace period

for the assessment of a fee on any installment not paid when due, shall

be considered an amendment to an agreement as set forth in this

paragraph. The provisions of this paragraph shall not apply in the case

of an agreement which expressly prohibits changing of terms or which

provides limitations on changing of terms which are more restrictive

than the requirements of this paragraph.

Any service charge, whether assessed by a fixed or variable rate, may

be reduced on such terms as the seller may determine, provided that the

terms of such reduction, including, if applicable, the date on which the

reduction will terminate, are disclosed to the buyer on the written

notice announcing the reduction, prior to the effective date of the

reduction. A new method of determining a service charge is a reduction

in the service charge if the charge determined under the new method

never exceeds the charge under the original method. The original service

charge or original method of determining the service charge may be

applied after the reduction ends to the entire outstanding indebtedness,

including any indebtedness incurred when the reduced service charge

applied, and disclosure of the same shall be provided to the buyer in

the written notice announcing the reduction. A reduction to a service

charge, including the resumption of the original service charge or the

original method of determining the service charge, shall not be

considered a change in terms for purposes of this paragraph.

3-a. No retail instalment credit agreement or guarantee of a retail

instalment credit agreement shall provide for a security interest in any

investment property, as defined in paragraph forty-nine of subsection

(a) of section 9--102 of the uniform commercial code, that is pledged as

collateral, unless (a) the contract either specifically identifies the

investment property as collateral or (b) the secured party is a

securities intermediary, as defined in paragraph fourteen of subsection

(a) of section 8-102 of the uniform commercial code, or commodity

intermediary, as defined in paragraph seventeen of subsection (a) of

section 9--102 of the uniform commercial code, with respect to the

investment property. The identification of an account shall include the

name of the holder, account number, and name of the entity holding the

investment property. In the event that a retail instalment credit

agreement or guarantee does not comply with this section, the security

interest in the investment property is void.

4. The seller or holder under a retail instalment credit agreement

shall promptly provide the buyer under the agreement with a statement as

of the end of each monthly period (which need not be a calendar month)

containing

(a) The items required to be set forth pursuant to 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

(b) A legend to the effect that the buyer may at any time pay his

total indebtedness.

5. (a) The fees and charges authorized by this subdivision and

subdivision three of this section shall be inclusive of all charges

incident to investigating and making the retail instalment credit

agreement and for the extension of credit thereunder. No fee, expense,

delinquency, collection or other charge whatsoever shall be taken,

received, reserved or contracted for by the seller under or holder of a

retail instalment credit agreement except as provided in this section. A

retail instalment credit agreement may provide for the payment of

attorney's fees not exceeding twenty per centum of the amount due and

payable under the credit agreement if it is referred to an attorney not

a salaried employee of the seller or holder for collection.

(b) In addition to the service charge on outstanding indebtedness

permitted under subdivision three of this section, the seller or holder

may charge, receive and collect any one or more of the fees and charges

described in this paragraph, provided that any such fee or charge is

provided for in the retail instalment credit agreement. When credit

cards are issued in connection with a retail instalment credit

agreement, the retail instalment credit agreement may provide for an

annual fee for membership in the credit card plan. If a buyer has

requested the issuance of a credit card, the fee for the first year may

be charged by the seller or holder at any time. The seller or holder

shall in each subsequent year in which an annual fee is payable, send

the buyer in or with the statement for the monthly billing period before

that in which the fee is to be billed, a notice that the annual fee will

be billed in the next monthly statement. A buyer who is not delinquent

or otherwise in breach of any term of the agreement with the seller or

holder shall have the right during the first six months after the annual

fee is billed to notify the seller or holder in writing, at its address

on the credit agreement, to terminate the buyer's account and request a

refund of the unused portion of the annual fee previously paid. Upon

receipt of the termination notice and refund request from such buyer,

the seller or holder shall refund to the buyer the unused pro-rata share

of any annual fee previously paid as of the first billing statement date

after receipt of the termination notice. The retail installment credit

agreement may provide for the assessment of a fee for any installment

which is not paid on or before the date on which it is due. A seller or

holder that imposes a fee for late payments without allowing a grace

period of at least ten days must credit any cash payment made by a buyer

to an authorized representative of the seller or holder at all stores,

or to a teller at a branch where deposits are accepted, as of the date

of the receipt of the payment. The retail installment credit agreement

may, in addition, provide for an overlimit charge. The overlimit charge

may be imposed whenever the specified credit limit is exceeded but not

more than once in a monthly billing cycle. If the overlimit charge is

imposed, the credit limit must be disclosed on the monthly billing

statement. The retail installment credit agreement also may provide for:

(i) a returned payment charge, in the amount set forth in section 5-328

of the general obligations law, for any check or other method of payment

that is returned unpaid, excluding payment made by automated teller

machine or other electronic media; (ii) a charge for replacement of lost

or stolen credit cards, which charge shall be applied only where a buyer

has suffered a lost or stolen credit card after two replacements

thereof; (iii) a charge for additional credit cards for the buyer's

account; and (iv) a charge for copies of sales slips, monthly statements

and other documents when such copies are not required by federal or

state law governing billing error disputes.

Sections 190.40 and 190.42 of the penal law shall not apply to fees

and charges set forth in this subdivision. For purposes of 12 U.S.C. §§

85, 1831 d, 1463(g) and 1785 (g), the fees and charges permitted under

this subdivision are interest under New York law, and all terms,

conditions, and other provisions of a retail instalment credit

agreement, including without limitation, fees and charges, provisions

relating to the method of determining the outstanding indebtedness on

which a service charge is imposed and circumstances in which a service

charge may be avoided, are material to the determination of the interest

rate under New York law.

6. If the cost of any insurance is to be separately charged to the

buyer, the retail instalment credit agreement shall state whether the

insurance is to be procured by the buyer or the seller or holder. If the

insurance is to be procured by the seller or holder, the seller or

holder shall comply with the provisions of subdivision five of section

four hundred two.

7. No retail instalment credit agreement shall require or entail the

execution of any note or series of notes by the buyer which when

separately negotiated will cut off as to third parties any right of

action or defense which the buyer may have against the seller.

8. The provisions of subdivisions four and five of section four

hundred two A and of sections four hundred six and four hundred twelve

hereof shall be applicable to retail instalment credit agreements. The

words "credit service charge" in subdivisions four and five of section

four hundred two A shall read "service charge" for the purposes of this

section.

9. The service charge allowed in subdivision three of this section

shall be allowed to a seller or holder under this section only:

(a) If the seller enters into an agreement subject to the provisions

of this article with any buyer on or after October first, nineteen

hundred fifty-seven; or

(b) In the case of any buyer who had entered into an agreement with a

seller prior to October first, nineteen hundred fifty-seven, if the

seller or holder delivers or mails to the buyer a copy of a retail

instalment credit agreement in conformity with this section duly

executed on behalf of the seller and the seller or holder thereafter

complies with all the other provisions of this section.

Nothing in this subdivision contained shall be construed to affect the

validity or invalidity of any agreement or alleged agreement made prior

to October first, nineteen hundred fifty-seven.

10. No retail instalment credit agreement shall contain any provision

by which:

(a) In the absence of the buyer's default, the holder may, arbitrarily

and without reasonable cause, accelerate the maturity of any part or all

of the amount owing thereunder;

(b) A power-of-attorney is given to confess judgment in this state, or

an assignment of wages is given;

(c) The buyer waives any right of action against the seller or holder

of the agreement, or other person acting on his behalf, for any illegal

act committed in the collection of payments under the agreement;

(d) The buyer executes a power-of-attorney appointing the seller or

holder of the agreement, or other person acting on his behalf, as the

buyer's agent in collecting payments under the agreement;

(e) The buyer relieves the seller from liability for any legal remedy

which the buyer may have against the seller under the agreement or

otherwise;

(f) The buyer waives any right to a trial by jury in any action or

proceeding arising out of the agreement.

(g) The buyer consents to receive any goods or services on a regular

or irregular basis. Any such consent to receive goods or services must

be separately agreed to by the buyer in a writing other than the retail

instalment credit agreement.

Any such prohibited provision shall be void but shall not otherwise

affect the validity of the contract.

11. (a) Provided that the retail instalment credit agreement complies

in all other respects with the provisions of this section, a financing

agency may enter into a credit agreement with a retail buyer for its own

account or on behalf of one or more retail sellers or municipal

corporations, or the New York city water board, which need not be named

in the agreement, pursuant to which the financing agency may, with the

buyer's consent, purchase or acquire from one or more retail sellers or

municipal corporations, or the New York city water board, which need not

be named in the credit agreement, indebtedness of the buyer under a

sales slip or memorandum evidencing a purchase or fine, civil penalty,

rent, rate, tax, fee, charge, revenue, financial obligation, or other

amount, including a penalty, special assessment or interest, to be paid

in accordance with the agreement. Such a credit agreement shall contain

the name and place of business of the financing agency in lieu of those

of a retail seller, municipal corporation or the New York city water

board, and may not contain any provision for a security interest in real

or personal property or fixtures of the buyer to secure payment or

performance of the buyer's obligation under the credit agreement other

than a security interest in a specifically identified interest-bearing

deposit account of the buyer with such financing agency. A financing

agency may in such a credit agreement contract for, and if it has so

contracted and delivered to the buyer a copy of the credit agreement

executed by it, may charge, receive and collect the service charge

authorized by this section. Each sales slip or memorandum evidencing a

purchase or fine, civil penalty, rent, rate, tax, fee, charge, revenue,

financial obligation, or other amount, including a penalty, special

assessment or interest due to a municipal corporation or the New York

city water board from the buyer to be paid in accordance with such a

credit agreement shall refer to the credit agreement between the buyer

and the financing agency by account number or otherwise and contain the

names of the retail buyer and the retail seller, municipal corporation

or the New York city water board.

A financing agency which purchases from more than one seller or

municipal corporation or which purchases from the New York city water

board indebtedness of a retail buyer to be paid in accordance with such

a retail instalment credit agreement entered into by the financing

agency with the buyer as provided in this subdivision may charge,

receive and collect the service charge authorized by subdivision three

of this section only if the service charge so authorized is computed on

the buyer's total outstanding indebtedness to the financing agency from

month to month to be paid in accordance with such a retail instalment

credit agreement.

(b) A financing agency may enter into a credit agreement with a retail

buyer for its own account or on behalf of one or more authorized

insurers or insurance agents or insurance brokers, who need not be named

in the agreement, pursuant to which the financing agency may, with the

buyer's consent, purchase or acquire from one or more authorized

insurers or insurance agents or brokers, who need not be named in the

agreement, the buyer's indebtedness under a sales slip or memorandum

evidencing a purchase of insurance under an insurance contract or

contracts, provided that (i) such credit agreement complies with the

requirements of paragraph (a) of this subdivision, and (ii) such credit

agreement does not permit cancellation of the insurance contract or

contracts as a result of default under the credit agreement by the

buyer. For purposes of this paragraph, the terms "authorized insurer",

"insurance contract", "insurance agent", and "insurance broker" shall be

as defined in or have the meanings assigned to them by section one

hundred seven of the insurance law.

(c) A single credit agreement entered into pursuant to either

paragraph (a) or paragraph (b) of this subdivision may provide for the

financing agency to acquire indebtedness of a retail buyer under a sales

slip or memorandum evidencing a purchase or, if applicable, a fine,

civil penalty, rate, rent, tax, fee, charge, revenue, financial

obligation or other amount, including a penalty, special assessment, or

interest, pursuant to the other of said paragraphs. Where a financing

agency enters into a credit agreement with a retail buyer for its own

account, the credit agreement may consist of an agreement complying in

all other respects with the provisions of this section, but executed

only by the financing agency, together with a credit card issued by it

to the retail buyer. The credit agreement, however, must then provide

that it shall not become effective unless and until the retail buyer or

a person authorized by him signs a sales slip or memorandum evidencing

purchase or lease of property or services or the payment of a fine,

civil penalty, rent, rate, tax, fee, charge, revenue, financial

obligation or other amount, including a penalty, special assessment or

interest, to a municipal corporation or the New York city water board by

use of the credit card and that prior thereto the retail buyer shall not

be responsible for any purchase or lease of property or services or the

payment of a fine, civil penalty, rate, rent, tax, fee, charge,

financial obligation, or other amount, including a penalty, special

assessment or interest, by use of the credit card after its loss or

theft.

(d) A credit agreement entered into pursuant to paragraph (a) or (b)

of this subdivision shall contain or be accompanied by a statement

making the disclosures required 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.

(e) A financing agency enters into a credit agreement provided for in

this subdivision in this state, for purposes of this article, if the

financing agency delivers or mails in this state to the buyer a copy of

the agreement executed by the financing agency, provided, however, that

in order to reduce the potential for theft or fraud, a financing agency

may mail the credit agreement from outside the state if the credit

agreement is prepared and sealed in the state before mailing and prior

to being transported to a location outside of the state for actual

mailing.

(f) For the purpose of this subdivision, the term "municipal

corporation", as defined in subdivision twenty-two of section four

hundred one of this chapter, shall include the White Plains parking

authority, and the term "purchase" shall include any fee, rate, rent or

other charge of such authority.

12. (a) Except as provided in paragraphs (b) and (c) of this

subdivision, no retail instalment credit agreement, or any agreement

executed in connection therewith, may provide for the creation of a

security interest in any personal or real property (including any goods

sold under such agreement) to secure payment of the buyer's outstanding

indebtedness under such retail instalment credit agreement. Any such

prohibited provision shall be void but shall not otherwise affect the

validity of such retail instalment credit agreement.

(b) A financing agency may require a pledge to such financing agency

of a specifically identified interest-bearing deposit account of the

buyer maintained at such financing agency as collateral security for a

loan made by such financing agency under the authority of this

subdivision and provided further that any such financing agency which

requires such a pledge shall be subject to the provisions of section

five hundred twenty-b of the general business law.

(c) Except for motor vehicles as defined in article nine of this

chapter, or goods which the seller knows or reasonably should know are

or are likely to be so affixed to a motor vehicle or to realty as to

become a part thereof, a retail seller, or financing agency which enters

into a retail installment credit agreement with a retail buyer on behalf

of a retail seller named in the agreement, may take or retain a purchase

money security interest, as that term is defined in section 9--103 of

the uniform commercial code, in any item of merchandise purchased at a

price of not less than two hundred dollars pursuant to a retail

installment credit agreement until the purchase price of such

merchandise is fully paid, but in no event shall any purchase money

security interest created hereunder be valid or enforceable for a period

greater than five years from the date a purchase is posted to any

account which may be used to purchase an item of merchandise at a price

less than two hundred dollars. In the event such a purchase money

security interest is taken or retained by a retail seller or financing

agency, payments shall be applied to the purchase in the order such

purchases are posted to the account after such payments are first

applied to any finance, late, or other charges imposed by the retail

seller or financing agency. Notwithstanding the provisions of section

9--609 of the uniform commercial code, repossession of merchandise

subject to a purchase money security interest permitted under this

subdivision shall be prohibited unless and until payment on the account

shall be in default for a period of at least thirty days and thereafter

a notice of default be mailed to the buyer providing an additional

thirty days time in which to cure the default on the account. In the

event of repossession without judicial process, a substantially

contemporaneous writing signed by the buyer indicating the buyer's

agreement to such repossession shall be required.

13. (a) Subject to the limitation contained in paragraph (b) of this

subdivision, the holder of a retail instalment credit agreement

(including for purposes of this subdivision a financing agency which

enters into a credit agreement with a retail buyer as provided in

subdivision eleven of this section) shall be subject to all claims

(other than tort claims) and defenses arising out of the buyer's

purchase of goods and services to be paid in accordance with the credit

agreement if (1) the buyer has made a good faith attempt to obtain

satisfactory resolution of a disagreement or problem relative to the

sale from the seller; (2) the amount of the initial transaction exceeds

fifty dollars; and (3) the place where the initial transaction occurred

was in the same state as the mailing address previously provided by the

buyer or was within one hundred miles from such address, except that the

limitations set forth in subparagraphs (2) and (3) of this paragraph

with respect to a buyer's right to assert claims and defenses against

the holder shall not be applicable to any transaction in which the

seller (A) is the same person as the holder; (B) is controlled by the

holder; (C) is under direct or indirect common control with the holder;

(D) is a franchised dealer of the holder's products or services; or (E)

has obtained the order for such sale through a mail solicitation made by

or participated in by the holder in which the buyer is solicited to

enter into such transactions by using the credit agreement with the

holder.

(b) The amount of claims or defenses asserted by the buyer may not

exceed the amount of indebtedness owing to the holder with respect to

such transaction at the time the buyer first notifies the holder or

seller of such claim or defense. For the purpose of determining the

amount of indebtedness owing to the holder in the preceding sentence,

payments and credits to the buyer's account are deemed to have been

applied, in the order indicated, to the payment of (1) service charges

in order of their entry to the account; and (2) debits to the account

other than those set forth above, in the order in which each debit entry

to the account was made.

14. (a) A seller of goods pursuant to the terms of this article shall

adopt and apply procedures to reasonably avoid debiting the buyer's

account with respect to any transaction, or to reasonably avoid selling

or assigning to a financing agency a sales slip or memorandum evidencing

a purchase of goods, prior to the date the goods subject to the

transaction are delivered to the buyer or the buyer's designee. A seller

of goods may debit the buyer's account, or sell or assign to a financing

agency a sales slip or memorandum evidencing a purchase of goods, on or

after the date of sale where:

(i) the goods subject to the transaction are shipped within ten days

of the date of sale and the seller has reason to believe that delivery

will be effected not later than fourteen days from the date of sale; or

(ii) the goods subject to the transaction are one of a kind or are to

be specifically manufactured for the buyer and are not suitable for sale

to others in the ordinary course of the seller's business; or

(iii) the buyer requested delayed delivery of goods that will be

available for delivery not later than fourteen days from the date of

sale; or

(iv) the buyer and seller have agreed that delivery of the goods will

occur at regular intervals or in instalments.

(b) For the purposes of this subdivision, a seller may debit the

buyer's account, or sell or assign to a financing agency a sales slip or

memorandum evidencing a purchase of goods, on or after the date of

shipment where, in the ordinary course of business, delivery is to be

effected no later than ten days after the date of shipment.

(c) It shall not be a violation of this subdivision if the seller

ships or makes the goods available for delivery as agreed and delivery

is delayed due to failure of the buyer to accept said delivery.

(d) The provisions of this subdivision shall not apply to mail order

merchandise as regulated by section three hundred ninety-six-m of the

general business law.