Filed Date: 6/21/1982
Status: Precedential
Modified Date: 7/5/2016
Anne L. Carson, Esq. Special Assistant Corporation Counsel, New York
You have asked two questions regarding the relationship between General Business Law, §
1) Is the right of prepayment of any contract or obligation provided by section 408(1) in conflict with the directive of section 394-b(2)(b) that payments to be made under certain contracts for instruction or of physical or social training facilities shall be in installments, and, if it is, which law should govern or in what manner can the conflict be resolved?
2) Is section 394-b, or the disclosure of an extract of section 394-b(2)(b) on a contract for dance instruction, for both, inconsistent with the disclosure requirements of section 402(2), and, if so, in what manner can that conflict be resolved?
General Business Law, §
"[a]ny contract for instruction in physical or social skills, or for the use by an individual patron of a dance hall studio * * * 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 * * * 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 per cent 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 or use is specified in the contract, the total amount so paid shall not exceed by more than five per cent the proportion of the total contract price that the expired portion of the entire term bears to the whole term of the contract." (Emphasis supplied.)
Personal Property Law, §
"In any case in which * * * [a retail instalment contract or obligation] 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
* * *
"(b) A notice in at least eight point bold type reading as follows: NOTICE TO THE BUYER: * * * 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." (Emphasis supplied.)
Personal Property Law, §
"Notwithstanding the provisions of any contract or obligation to the contrary, any buyer may pay it in full at any time before the maturity of the final instalment of the time balance thereof and if he does so shall receive and be entitled to receive a refund credit thereon * * *." (Emphasis supplied.)
There is no case law or legislative history on the relationship between the installment payment requirement of General Business Law, §
"* * * prohibit[ing] dancing schools * * * from offering lifetime contracts to their subscribers * * *"
and by
"* * * requir[ing] all subscriptions for an extended period of time which involve the payment of more than $500.00 to be paid out on an instalment basis, payments never to exceed the prorated value of actual services rendered by more than five percent." (Id., Emphasis supplied.)
Under section 394-b, contracts which are not for a definite term and which do not contain an installment payment schedule calculated in coordination with the units of instruction or services actually received, are void. See also, Best v Arthur Murray Town Country DanceClub,
In order to implement the policy underlying section 394-b that payments under specified contracts correspond to services rendered, the Legislature, in our view, clearly intended that such payments be made only on an installment basis, and in no other manner. That being the case, it is our opinion that the installment payment directive of section 394-b is inconsistent with the right of prepayment provided by Personal Property Law, §
There are other inconsistencies between the two statutes. Section
We are also unable to ascertain what benefit might be derived by the consumer from prepaying a contract for dance instruction, since installment payments will never exceed the value of services rendered by more than five percent. Personal Property Law, §
Finally, we note the direct conflict between Personal Property Law, §
We believe that section 394-b was enacted by the Legislature in response to a specific problem in a specific industry and was intended to cover the whole subject of dance hall studio and certain other contracts. If the Legislature had intended to make the provisions of Article 10 of the Personal Property Law applicable to contracts covered under section 394-b, it could have inserted that section in Article 10, as it apparently did in the case of Personal Property Law, §
In view of the conflict between General Business Law, §
Having concluded that the right of prepayment does not apply to contracts covered by General Business Law, §
We express no opinion as to the relationship between General Business Law, §
The Attorney General renders formal opinions only to officers and departments of the State government. This perforce is an informal and unofficial expression of views of this office.