S-5210.1

SENATE BILL 6437

BySenator Zeiger

AN ACT Relating to the use of automatic renewal provisions in business contracts; and adding a new chapter to Title 19 RCW.

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

(1) "Business contract" means a contract that is entered into for the lease of business equipment, if any of the business equipment is used primarily in this state, or for providing business services, but only if the contract is for the direct benefit of the end user of the business equipment or business services. "Business contract" does not include any of the following:

(a) A contract that permits a customer to terminate an automatically renewed or extended contract period by giving the seller notice of the customer's intention to terminate the contract period, if the contract does not require the customer to give notice to the seller more than one month before the date of the customer's intended termination;

(b) A contract in which a customer agrees to purchase from a seller an undetermined amount of business services or lease from the seller an undetermined amount of business equipment, and agrees to pay the seller based on the amount of business services received or business equipment leased, subject to a predetermined minimum payment in a twelve-month period specified in the contract, if the predetermined minimum payment is two hundred fifty thousand dollars or more;

(c) A contract for the lease or purchase of real property;

(d) A contract for the lease of a vehicle for which a certificate of title has been issued under chapter 46.12 RCW;

(e) A contract for the lease of medical equipment;

(f) A contract for the lease of equipment that is for personal, family, or household purposes;

(g) A contract for the purchase of services that are for personal, family, or household purposes;

(h) A contract for electrical or gas service to which an electric utility, as defined in RCW 19.280.020, or a gas company, as defined in RCW 80.04.010, is a party;

(i) A contract for the lease or purchase of telecommunications service that is subject to regulation under Title 80 RCW;

(j) A contract to which a federal, state, or local government entity is a party;

(k) A contract between a cooperative association organized under or subject to chapter 23.86 RCW and a member of the cooperative association, or a contract under which a cooperative association organized under or subject to chapter 23.86 RCW is a seller; and

(l) A contract for the lease, maintenance, repair, service, or inspection of elevator or escalator systems, including mechanical and electrical components of such systems when built into real property.

(2) "Customer" means a person who conducts business in this state and who is the lessee under a business contract that is entered into for the lease of business equipment or the purchaser under a contract that is entered into for the purchase of business services.

(3) "Seller" means the provider of a business service or the lessor of business equipment under a business contract.

(a) At the time the customer enters into the contract, present to the customer a form that includes the disclosures required under subsection (2) of this section and obtain the customer's signature on the form; or

(b) Include the disclosures required under subsection (2) of this section in the contract in a conspicuous manner and obtain the customer's initials on the contract on a page on which a disclosure appears.

(2) A disclosure required under subsection (1) of this section must contain all of the following:

(a) A statement that the contract will be renewed or extended unless the customer declines renewal or extension;

(b) A statement indicating the duration of the additional contract period that would result from an automatic renewal or extension period;

(c) A statement indicating whether an increase in charges to the customer will apply upon an automatic renewal or extension;

(d) A description of action the customer must take to decline renewal or extension; and

(e) The date of the deadline for the customer to decline renewal or extension.

(3) If a seller fails to comply with this section, an automatic renewal or extension provision in the contract is not enforceable and the contract terminates at the end of the current contract term.

(4) This section does not apply to a contract in effect on May 1, 2021, or to subsequent renewals of such a contract.

(1) A statement that the contract will be renewed or extended unless the customer declines renewal or extension;

(2) The deadline for the customer to decline renewal or extension;

(3) A description of any increase in charges to the customer that will apply after renewal or extension; and

(4) A description of action that the customer must take to decline renewal or extension.

(1) Mailing a copy of the notice by United States mail, first-class, to the customer at the customer's last known business address, unless the contract requires the customer to notify the seller by certified mail of the customer's intent to cancel;

(2) Mailing a copy of the notice by registered or certified mail to the customer at the customer's last known business address;

(3) Giving a copy of the notice personally to an owner, officer, director, or managing agent of the customer's business;

(4) Including the notice on the first page of a monthly invoice sent to the customer. Notice under this subsection (4) must be prominently displayed in bold face type and in a type size no smaller than twelve-point;

(5) Sending a facsimile to the customer to the customer's last known facsimile number, if the contract permits the customer to use this method to notify the seller that the customer declines renewal or extension of the contract;

(6) Sending an email message to the customer at the customer's last known email address, if the contract permits the customer to use this method to notify the seller that the customer declines renewal or extension of the contract; or

(7) Sending the notice via a recognized overnight courier service, if the contract permits the customer to use this method to notify the seller that the customer declines renewal or extension of the contract.

(2) A provision in a business contract that violates this section is void and unenforceable.

(a) A customer who has notified a seller that the customer declines renewal or extension of a business contract to which section 3 of this act applies, if the seller has failed to give notice as required under sections 3 and 4 of this act and the seller has refused to terminate the contract as requested by the customer; or

(b) A customer against whom a seller has attempted to enforce a provision in a business contract that is unenforceable under section 5 of this act.

(2) Notwithstanding subsection (1)(a) of this section, if a seller who fails to give a customer a notice required under section 3 of this act subsequently receives notice that the customer declines renewal or extension and agrees to terminate the contract as of the date the customer notified the seller, the customer is responsible for charges incurred by the customer under the contract before the date on which the customer notified the seller and the customer may not bring an action against the seller based on the seller's failure to provide the required notice, unless the seller's failure to provide the required notice was willful or malicious.

(3) A customer who prevails in an action or counterclaim under this section is entitled to damages in either of the following amounts:

(a) An amount that equals twice the amount of the damages incurred by the customer; or

(b) An amount that equals twice the amount of the periodic payment specified in the contract or one thousand dollars, whichever is less.

(4) The court shall award a customer who prevails in an action or counterclaim under this section costs, including reasonable attorneys' fees.

(5) A seller is not liable in an action or counterclaim under this section if the court finds either of the following:

(a) All of the following:

(i) The seller has established and implemented written procedures for complying with this chapter;

(ii) The seller's failure to comply with sections 3 and 4 of this act, or the seller's attempt to enforce a provision that is void and unenforceable under section 5 of this act, was not willful or malicious; and

(iii) The seller has refunded any amounts paid by the customer after the date of the renewal or extension until the date on which the business contract is terminated; or

(b) The customer requested, in writing, renewal or extension of the contract that is the basis for the customer's action or counterclaim against the seller, and the customer was aware of the terms under which the contract would be renewed or extended.

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