N.Y. GBS Law § 394-B — New York Code / Act GBS / Article 26 / Section 394-B
Limitations on certain contracts for instruction or use of physical or social training facilities
Status: in_force

§ 394-b. Limitations on certain contracts for instruction or use of\nphysical or social training facilities. 1. (a) "Total contract price"\nshall mean the total cash price paid or to be paid by the buyer for\ninstruction or services which are the subject of the written contract.\n  (b) "Notice of cancellation" shall be deemed to have been provided by\na buyer by mailing or delivering written notification to cancel the\ncontract to the seller or by failing to attend instructional facilities\nfor a period of five consecutive appointment days on which classes or\nthe provisions of services which are the subject of the contract were\nprearranged with the buyer.\n  (c) "Reasonable and fair service fee" shall mean no more than ten\npercent of the total contract price for contracts of one thousand\ndollars and under. For contracts over one thousand dollars, reasonable\nand fair service fee shall mean no more than one hundred dollars plus an\namount equal to five percent of the total contract price over one\nthousand dollars, not to exceed two hundred fifty dollars.\n  (d) "Initial contract" shall mean the buyers first contract for\nservices. Subsequent contracts shall be referred to as renewals.\nContracts for services which are entered into, after a lapse of\ncontractual service for a period of twelve consecutive months, shall be\ndeemed to be initial contracts.\n  2. Any contract for instruction in physical or social skills, or for\nthe use by an individual patron of a dance hall studio, ballroom, or\nother physical or other social training facility, which is measured by\nthe life of the person receiving such instruction or the use of such\nphysical or social training facility as an individual patron, shall be\ndeemed void and unenforceable as contrary to public policy.\n  3. Any initial contract for instruction in physical or social skills,\nor for the use by an individual patron of a dance hall studio, ballroom,\nor other physical or social training facility which requires payment by\nthe person receiving such instruction, or the use of such physical or\nsocial training facilities, of a total amount in excess of five hundred\ndollars, or granting to the person furnishing such instruction or\nproviding the use of such facilities, an automatic renewal option where\nthe payments to be made during the original contract period and the\noption period combined are in excess of five hundred dollars, shall be\nvalid and enforceable only if: (a) The term of the contract shall be for\na precisely measured period of years, or any definite part thereof; and\n(b) the payments to be made thereunder shall be in instalments so\ncomputed that the total amounts so paid shall not exceed by more than\nfive percent the prorated cost of the units of instruction or use\nactually received thereunder at the time the latest payment is made; or,\nif no definite number of units of instruction or use is specified in the\ncontract, the total amount so paid shall not exceed by more than five\npercent the proportion of the total contract price that the expired\nportion of the entire term bears to the whole term of the contract.\n  4. No contract for services shall be assigned without written consent\nof the person receiving such instruction or for the use of such physical\nor social training facility.\n  5. (a) Every contract for services shall provide that such contract\nmay be canceled at any time. Notice of cancellation shall be delivered\nor mailed by certified or registered United States mail at the address\nspecified in the contract. Such contract shall contain the following\nwritten information in at least ten point type: "CONSUMERS RIGHT TO\nCANCELLATION. YOU MAY CANCEL THIS CONTRACT AT ANY TIME BY DELIVERING OR\nMAILING BY CERTIFIED OR REGISTERED UNITED STATES MAIL TO THE ADDRESS\nSPECIFIED IN THE CONTRACT. IF YOU CANCEL THE CONTRACT WITHIN THREE (3)\nDAYS FROM THE DATE OF RECEIPT, YOU WILL BE ENTITLED TO A FULL REFUND. TO\nCANCEL A CONTRACT WITHIN THREE (3) DAYS FROM THE DATE OF RECEIPT BY\nREGISTERED OR CERTIFIED MAIL, SUCH MAIL MUST BE POSTMARKED WITHIN THE\nTHREE (3) DAY PERIOD. AFTER THE THREE (3) DAY PERIOD, YOU MAY BE\nASSESSED A REASONABLE AND FAIR SERVICE FEE. IF YOU UTILIZED SERVICES AND\nSUBSEQUENTLY CANCEL THE CONTRACT, YOU WILL BE CHARGED ONLY FOR\nINSTRUCTION SERVICES ACTUALLY FURNISHED AND A REASONABLE AND FAIR\nSERVICE FEE, AS DEFINED IN PARAGRAPH (C) OF SUBDIVISION 1 OF SECTION\n394-B OF THE GENERAL BUSINESS LAW. A BREACH OF THIS PROVISION SHALL\nSUBJECT THE SELLER TO PAY DAMAGES UP TO TWICE THE AMOUNT OF THE ACTUAL\nDAMAGES PLUS REASONABLE ATTORNEYS FEES." The provisions of this\nparagraph shall be specifically set forth in every contract for\nservices; or in the event that such provisions are omitted therefrom,\nthey shall be deemed a part of such contract by operation of law and\nshall be enforceable as though fully set forth therein.\n  (b) All moneys paid pursuant to such contract shall be refunded within\nthirty business days of receipt of such notice of cancellation. If the\nbuyer has executed any credit or loan agreement to pay for all or part\nof the service, any such negotiable instrument executed by the buyer\nshall also be returned within thirty days. Any buyer who cancels such\ncontract within three days of execution shall be entitled to a full\nrefund. After the three day time frame, a seller may assess a reasonable\nand fair service fee. In addition, the prorated cost of any instruction\nprovided may be deducted out of the refund amount.\n  (c) If a buyer fails to attend instructional facilities for a period\nof five consecutive appointment days on which classes for the provision\nof services which are the subject of the contract were prearranged with\nthe buyer, the contract shall be deemed to be canceled, unless the buyer\notherwise provides written consent to maintain the contract. All monies\nshall be refunded pursuant to paragraph (b) of this subdivision,\nhowever, the instructional facility may withhold monies to cover the\nprorated cost of the prearranged instructional services in which the\nbuyer failed to attend.\n  6. Nothing herein shall be construed to apply to contracts for\ninstruction at schools operating pursuant to the provisions of the\neducation law.\n  7. This section shall apply to all contracts to be executed or renewed\nafter May first, nineteen hundred sixty-four.\n  8. Any contract for services which is inconsistent with the applicable\nprovisions of this section and any waiver by the buyer of the provisions\nof this section shall be void and unenforceable as contrary to public\npolicy.\n  9. Nothing in this section shall be construed so as to nullify or\nimpair any right or rights which a buyer may have against a seller at\ncommon law, by statute, or otherwise.\n  10. In addition to the remedies hereinbefore provided, the attorney\ngeneral may bring an action on behalf of the people of the state to\nrestrain further violations of this section, to enforce the provisions\nof this section and for such other relief as may be appropriate.\n  11. No provision of this section shall be deemed to restrict the\nauthority of any county, city, town or village to enact and enforce\nadditional laws, ordinances or codes, or portions thereof, provided the\nprovisions thereof are not inconsistent with the provisions of this\nsection.\n