H-1616              _______________________________________________

                                          SUBSTITUTE HOUSE BILL NO. 1653

                        _______________________________________________

State of Washington                               51st Legislature                              1989 Regular Session

By House Committee on Judiciary (originally sponsored by Representative Appelwick)

Read first time 2/13/89.

AN ACT Relating to credit agreements; and adding new sections to chapter 19.36 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

          (1) "Credit agreement" means a promise or an agreement to lend or forbear repayment of money, goods or things in action, to otherwise extend credit, or to make any other financial accommodation.  "Credit agreement" does not mean the mere rendering of financial advice by a creditor or merely consulting with a creditor.  A credit agreement may not be implied from the relationship, fiduciary or otherwise, of a creditor and a debtor;

          (2) "Creditor" means a person who extends credit under a credit agreement with a debtor, or offers to enter into a credit agreement with another person, or who is contacted by another person for the purpose of entering into a credit agreement;

          (3) "Debtor" means a person who obtains credit from or owes money to a creditor, or who seeks and/or receives an offer to enter into a credit agreement with another person;

          (4) "Person" means any individual, partnership, corporate entity, or other form of organization or association.

NEW SECTION. Sec. 2.     (1) Except as provided in subsection (2) of this section, neither a creditor nor debtor may maintain an action or assert a defense based on a credit agreement or breach of a credit agreement unless the credit agreement is in writing and signed by both the creditor and debtor.  Partial performance of a credit agreement does not remove the agreement from the operation of this section.

          (2) Subsection (1) of this section does not bar an action or defense by a debtor unless both of the following conditions have been met:

          (a) The creditor has given to the debtor a written notice in substantially the following form:

"Oral agreements or commitments to loan money, extend credit, or to forbear from enforcing repayment of a debt are not enforceable under Washington law.  To protect you and us from misunderstandings or disappointments, any agreements we reach concerning such matters must be reduced to writing and signed by each of us."

          (b) The notice described in (a) of this subsection was given by the creditor to the debtor:

          (i) Within one year before the formation of the alleged credit agreement;

          (ii) During the initial contact pertaining to the alleged credit agreement; or

          (iii) Within ten days after the initial contact pertaining to the alleged agreement.

NEW SECTION. Sec. 3.     This act applies to all actions commenced on or after July 1, 1989.

NEW SECTION. Sec. 4.     Sections 1 through 3 of this act are each added to chapter 19.36 RCW.