As a transactions attorney that drafts agreements for businesses I have found that explaining what certain clauses do is beneficial to the client and organization. Therefore, today's Law in the Brief covers Act 139. Also lookout in the future I will be doing little posts on boilerplate language to help you understand what is going into an agreement.
This new law aims to help consumers by regulating the language used for contracts with automatic renewal clauses. Act 139: Relating to Contracts, requires the following:
- use of clear and conspicuous disclosure of automatic renewal clauses and cancellation procedures for all consumer contracts and offers with an automatic renewal provision and additional disclosure for contracts with a specified term of twelve months or more.
This new law will be assigned a number under Chapter 481 of the Hawaii Revised Statutes, which is the Fair Trade Regulations chapter. Specifically, it will be under Part I, the Unfair Practices Act. Currently, there are about eleven states that have enacted similar disclosure requirements at the inception and immediately prior to the renewal of the contract type of laws.
- Financial Institutions, for the activities regulated under under Chapter 412);
- Insurers, for the activities regulated under their respective chapters, as follows:
- Insurance companies(Chapters 431);
- Mutual benefit societies (Chapter 432);
- HMOs (Chapter 432).
- Do you let the consumer know what the terms of automatic renewal are?
- Is it clear and conspicuous in the agreement?
- Do you have a system that monitors contracts and sends out notices when their term is almost up?
- means in larger type than the surrounding text;
- in contrasting type, font, or color to the surrounding text of the same size; or
- set off from the surrounding text of the same size by symbols or other marks in a manner that clearly calls attention to the language.
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*Disclaimer: This post discusses general legal issues, but does not constitute legal advice in any respect. No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction. Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.