FINAL BILL REPORT

2SHB 1653

                                  C 211 L 90

BYHouse Committee on Judiciary (originally sponsored by Representative Appelwick)

Regulating credit agreements.

House Committe on Judiciary

Senate Committee on Financial Institutions & Insurance

SYNOPSIS AS ENACTED

BACKGROUND:

Washington has a "statute of frauds" that makes certain kinds of agreements or promises unenforceable by any party unless they are made in writing. Agreements that must be in writing to be enforceable include an agreement to be performed more than one year after its making, an agreement to pay the debts of another, an agreement in consideration of marriage except for a mutual agreement to marry, an agreement by an executor to pay for damages out of his or her own estate, and an agreement to buy or sell real estate on a commission.

Other statutes also require writings for specific purposes such as assignments for the benefit of creditors, conveyances of real property, and rental of residential property.

SUMMARY:

A credit agreement is not enforceable against a creditor unless the agreement is in writing and signed by the creditor.  A credit agreement is defined as a commitment by a creditor to make a loan.  The term also includes an agreement to modify such a commitment, or an agreement not to enforce repayment provisions of such a commitment.  Partial performance of an unwritten agreement does not make the agreement enforceable against the creditor.

In order for these provisions to apply, a creditor must give written notice to a debtor that oral agreements are not enforceable.  If notice is not given, then the requirement that agreements be in writing before a debtor may sue does not apply.  However, once notice has been given to a particular debtor, it is valid for any subsequent credit agreement involving that creditor.

The prohibition against suing creditors for non-written credit agreements does not apply to loans to individuals that are primarily for personal, family, or household purposes.

VOTES ON FINAL PASSAGE:

      House 95   0

      Senate    48     1

EFFECTIVE:June 7, 1990