N.Y. Personal Property Law § 501: Form

§ 501. Form. 1. A rental-purchase agreement must be written in plain

English and in any other language used by the merchant in an

advertisement related to the rental-purchase agreement. Numerical

amounts must be stated in figures.

2. Disclosures required by this section must be printed or typed in

each rental-purchase agreement in a size equal to at least ten-point

bold-faced type.

3. A rental-purchase agreement may not contain a provision:

(a) requiring a confession of judgment;

(b) authorizing a merchant or an agent of the merchant to commit a

breach of the peace in the repossession of merchandise;

(c) waiving a defense, counterclaim, or right the consumer may have

against the merchant or an agent of the merchant;

(d) requiring the purchase of insurance from the merchant to cover the

merchandise;

(e) requiring the payment of a late charge or reinstatement fee unless

a periodic payment is delinquent for more than three days for agreements

that are renewed on week by week terms and seven days for agreements

that are renewed on month by month terms, and the charge or fee is in an

amount not more than the greater of ten percent of the delinquent amount

or three dollars for agreements that are renewed on week by week terms

and not more than the greater of ten percent of the delinquent amount or

five dollars for agreements that are renewed on month by month terms. In

the event that multiple items are leased to a consumer pursuant to more

than one rental-purchase agreement, any late fee imposed pursuant to

this section shall not exceed ten percent of the total of the periodic

payments that are delinquent.

(f) requiring a payment in addition to regular periodic payments in

order to acquire ownership of the merchandise or requiring periodic

payments totalling more than the cost to acquire ownership, as provided

in section five hundred three of this article.

4. Only one late charge or reinstatement fee may be assessed for a

delinquent periodic payment regardless of the period during which it

remains in default. No merchant shall assess a late charge for a

periodic payment made in full on its due date or within three days for

agreements that are renewed on week by week terms or seven days for

agreements that are renewed on month by month terms when the only

delinquency is attributable to late fees assessed on earlier periodic

payments. With respect to payments accepted by mail or by store deposit

box, no merchant shall assess a late fee for payments which are

post-marked or received before the expiration of the applicable

delinquency periods.

5. A rental-purchase agreement must provide that:

(a) a charge in addition to periodic payments, if any, must be

reasonably related to the cost of a service performed;

(b) a consumer who fails to make a timely payment may reinstate an

agreement without losing rights or options previously acquired and

without incurring any charges, other than rental charges for the time he

possessed the property, except for those charges provided for in

paragraph (e) of subdivision three of this section by making the

required payment before the later of seven days or half the number of

days in a regular payment period after the due date of the payment;

(c) if the merchandise is returned or voluntarily surrendered by the

consumer, other than through judicial process, during the applicable

reinstatement period set forth in paragraph (b) of this subdivision, the

consumer's right to reinstate the agreement as set forth in paragraph

(b) of this subdivision shall be extended for a period of not less than

one year after the date of the return of the merchandise.

6. This section does not prevent a merchant from attempting to

repossess merchandise during the reinstatement period provided in

paragraph (b) of subdivision five of this section. The consumer's right

to reinstate an agreement does not expire because of such a

repossession. If the consumer is entitled to reinstatement after

repossession, then, within fifteen days of the repossession, the

merchant shall provide written notice to the consumer of the consumer's

right to reinstate the agreement pursuant to paragraph (c) of

subdivision five of this section. On reinstatement, the merchant shall

provide the consumer with the same merchandise or substitute merchandise

of comparable quality and condition. If substitute merchandise is

provided, the merchant shall provide the consumer with the disclosures

required in subdivision seven of this section.

7. (a) Every rental-purchase agreement shall be contained in a single

document which shall set forth all of the agreements of the merchant and

the consumer with respect to the rights and obligations of each party.

Every rental-purchase agreement shall clearly and conspicuously disclose

all of the following:

(1) the names of the merchant and the consumer, the merchant's

business address and telephone number, the consumer's address, the date

on which the agreement is executed, and a description of the merchandise

sufficient to identify it;

(2) whether the merchandise subject to the rental-purchase agreement

is new or used, provided, however that it shall not be a violation of

this section to indicate that the merchandise is used if it is actually

new;

(3) the minimum period for which the consumer is obligated under the

rental-purchase agreement; the duration of the rental-purchase agreement

if all regularly scheduled periodic payments are made, designated as the

"rental period"; and the amount of each periodic payment;

(4) the total of payments and the total number of periodic payments

necessary to acquire ownership of the merchandise if the renter makes

all regularly scheduled periodic payments;

(5) the cash price of the merchandise subject to the rental purchase

agreement;

(6) the cost of rental;

(7) the amount and purpose of any other payment or fee in addition to

those specified pursuant to subparagraphs three and four of this

paragraph, including any late payment fee;

(8) a statement that the total number and dollar amount of payments

necessary to acquire ownership of the rental merchandise disclosed under

subparagraph four of this paragraph does not include other fees, such as

late payment fees, and that the consumer should read the rental-purchase

agreement for an explanation of any applicable additional fees;

(9) whether the consumer is liable for loss or damage to the

merchandise and, if so, the maximum amount for which the consumer may be

liable, which in the case of loss shall in no event be greater than the

price the consumer would have paid to exercise an early purchase option

pursuant to this article. In the case of damage to the merchandise,

other than normal wear and tear the consumer shall be liable for the

lesser of the price the consumer would have paid to exercise an early

purchase option pursuant to this article or the cost of the repair as

determined by the merchant;

(10) that the consumer does not acquire ownership rights unless the

consumer has complied with the ownership terms of the agreement;

(11) the following notice:

NOTICE

You are renting this merchandise. You will not own it until you make

all of the regularly scheduled payments or you use the early purchase

option.

You do not have the right to keep the merchandise if you do not make

required payments or do not use the early purchase option. If you miss a

payment, the merchant can repossess the merchandise, but, you may have

the right to the return of the same or similar merchandise.

See the contract for an explanation of your rights.

(12) a statement of the consumer's right to acquire ownership as

provided in section five hundred four of this article, including

substantially the following statement: "The attached chart shows the

amount required to exercise your early purchase option after each

renewal payment, assuming you make each periodic payment on time." The

rental-purchase agreement shall be accompanied by a chart showing the

amount required to exercise the consumer's early purchase option after

each periodic payment if payments are made as scheduled;

(13) a description of the consumer's reinstatement rights as provided

in subdivision five of this section;

(14) a description of the consumer's right to lower periodic payment

amounts as provided in section five hundred four-a of this article.

(15) if warranty coverage is transferable to a consumer who acquires

ownership of the merchandise, a statement that the unexpired portion of

all warranties provided by the manufacturer, distributor, or seller of

the merchandise that is the subject of the rental-purchase agreement

will be transferred by the merchant to the consumer at the time the

consumer acquires ownership of the merchandise from the merchant; and

(16) a description of the merchant's obligation to maintain the rental

merchandise and to repair or replace rental merchandise that is not

operating properly, as provided in section five hundred four-b of this

article.

(b) (1) The disclosures required by subparagraphs three, four, five,

and six of paragraph (a) of this subdivision shall be printed in at

least ten-point boldfaced type or capital letters if typed and shall be

grouped together in a box formed by a heavy line in the following form:

________________________________________________________________________

TOTAL OF COST OF RENTAL CASH PRICE

PAYMENTS

$ $ $

You must pay Amount over Merchandise available

this amount to cash at this

own the price you will price for cash from

merchandise if pay if the merchant. See

you make all you make all about your

the regular regular early purchase

payments. payments. option rights.

You can buy

the merchandise

for less

under the

early

purchase

option.

________________________________________________________________________

AMOUNT OF NUMBER RENTAL

EACH PAYMENT OF PERIOD

PAYMENTS

$

per

_______________

(insert period)

________________________________________________________________________

(2) The box described in subparagraph one of this paragraph shall

appear immediately above the space reserved for the consumer's

signature.

(c) The disclosures required by subparagraphs three, four, five, and

six of paragraph (a) of this subdivision shall be grouped together in a

box formed by a heavy line in the form prescribed in paragraph (b) of

this subdivision and shall be clearly and conspicuously placed on a tag

or sticker affixed to the merchandise available for rental-purchase. If

the merchandise available for rental-purchase is not displayed at the

merchant's place of business but appears in a photograph or catalog

shown to consumers, a tag or sticker shall be affixed to the photograph

of the merchandise or catalog shown to consumers or shall be given to

consumers. The disclosure required by subparagraph two of paragraph (a)

of this subdivision also shall be clearly and conspicuously placed on

the tag or sticker. The provisions of this paragraph shall not apply to

photographic depictions of merchandise that comply with the provisions

of section five hundred five of this article.

(d) All disclosures required by this subdivision shall be printed or

typed in a color or shade that clearly contrasts with the background.

8. (a) (1) Subject to federal law and regulation, no rental-purchase

agreement shall contain a mandatory arbitration clause. Nothing

contained herein shall be construed to prohibit a merchant from

incorporating a provision within such contract that such merchant agrees

that the decision of the arbitrator or panel of arbitrators shall be

final in its application to such merchant and not subject to court

review.

(2) The provisions of a mandatory arbitration clause shall be null and

void but shall not constitute a violation of this article. The inclusion

of such clause in a rental-purchase agreement shall not serve to impair

the enforceability of any other provision of such contract.

(b) For the purposes of this subdivision the following terms shall

have the following meaning:

(1) "mandatory arbitration clause" shall mean a term or provision

contained in a rental-purchase agreement which requires the consumer to

submit any controversy thereafter arising under such agreement to

arbitration prior to the commencement of any legal action to enforce the

provisions of such agreement and which also further provides language to

the effect that the decision of the arbitrator or panel of arbitrators

in its application to the consumer shall be final and not subject to

court review.

(2) The term "arbitration" shall mean the use of a decision making

forum conducted by an arbitrator or panel of arbitrators within the

meaning and subject to the provisions of article seventy-five of the

civil practice law and rules.