Court Opinion

ID: 4129603
Source: CourtListenerOpinion
Date Created: 2017-02-18 00:54:05.805578+00
Date Added: 2024-06-11T14:31:57.570044
License: Public Domain

July 14, 1999

Mr. Wayne Thor-burn                               Opinion No. JC-0078
Administrator
Texas Real Estate Commission                      Re: Whether chapter 37 of the Business and
P.O. Box 12188                                    Commerce Code applies to unsolicited telephone
Austin, Texas 7871 I-2188                         calls by licensed residential service companies to
                                                  consumers for the purpose of selling residential
                                                  service contracts and related questions (RQ-1166)

Dear Mr. Thorbum:

          You ask whether chapter 37 of the Business and Commerce Code, regulating telephone
solicitations, applies to solicitations by residential service companies selling residential service
contracts to consumers.      You also ask whether chapter 39 of the Business and Commerce Code,
relating to consumers’ rights to cancel certain consumer transactions, applies to such solicitations
by real estate brokers and real estate salespersons licensed by the Texas Real Estate Commission (the
“Commission”).       We conclude that chapter 37 applies to unsolicited telephone calls made by a
residential service company for the purpose of selling residential service contracts. However, an
unsolicited telephone call to sell a new contract to a consumer who held or holds such a contract is
excepted from that chapter’s requirements dealing with when and how consumer telephone calls
must be made. We also conclude that chapter 39 applies to residential service contract solicitations
by a licensed real estate broker or salesperson at a home being listed or shown to a prospective buyer
if (1) the broker or salesperson is acting as the agent for the residential service company, and (2) the
purchaser agrees to purchase the services at the home or a place other than the merchant’s place of
business. However, such a transaction may be excepted from chapter 39 if the parties engaged in
prior negotiations at a fixed business establishment.

         Residential service companies are licensed and regulated by the Commission under the
Residential Service Company Act (the “Act”), TEX. REV. Crv. STAT. ANN. art. 6573b (Vernon Supp.
1999). Under the Act, any person “who issues and performs, or arranges to perform, services
pursuant to a residential service contract” is a residential service company. Id. 5 4(b). A “residential
service contract” is a contract “whereby, for a fee, a person undertakes, for a specified period of time,
to maintain, repair, or replace all or any part of the structural components, the appliances, or the
electrical, plumbing, heating, cooling, or air-conditioning systems of a residential property.” Id.
5 4(a). The residential service company agrees to provide the services contracted for when requested
by the holder of the contract. Id. @15(a)(3)(B)(v), (vi).
Mr. Wayne Thorburn        - Page 2                    (X-0078)

         You tell us that residential service contracts are generally offered by real estate brokers and
salespersons to sellers or buyers in connection with the sale of a home, but they are also marketed
by service companies directly to consumers by telephone and mail. We understand that the seller
of the home typically purchases the contract, usually for a term of one year, for the benefit of the
buyer and pays the fee from the proceeds of the sale. Thus, the initial contract is not sold by
telephone or mail solicitation by the service company but by the real estate broker or salesperson
involved in the sale of the home. After the initial period of coverage, however, the home buyer may
“renew” the contract. The renewal or sale of a new contract, you tell us, is done by mail and
telephone solicitation by the service companies. We understand your request is prompted by an
increase in the direct sale of contracts by service companies to consumers who had previously
purchased such contracts.

         Your first two questions relate to chapter 37 of the Business and Commerce Code. You first
ask if chapter 37 of the Business and Commerce Code applies to an unsolicited telephone call made
by an employee or agent of a licensed residential service company to a consumer for the purpose of
selling a residential service contract. If chapter 37 applies, you next ask, “what are the rights of a
consumer and the obligations of a licensed residential service company respecting notice,
cancellation, and refund of the fee paid for the residential service contract?’ See Letter from
Mr. Wayne Thorbum, Administrator, Texas Real Estate Commission, to Honorable Dan Morales,
Attorney General (July 22,1998) (on tile with Opinion Committee) [hereinafter Request Letter of
7/22/98]. Based on the information provided, we understand the solicitation that you first ask about
is by the residential service company that had previously sold the residential service contract to the
seller of a home for the benefit of the home buyer; the consumer being solicited is the home buyer
and holder of the residential service contract. Additionally, we assume the rights and obligations
of the soliciting residential service company and the consumer that you ask about in your second
question are only those under chapter 37. Because the two questions require us to review chapter
37 in its entirety, we address them together.

         Chapter 37 regulates telephone solicitations. The chapter applies to a person who makes an
unsolicited telephone call to a residential telephone number to solicit the sale of consumer goods or
services, extend credit for a consumer good or service, obtain information that will or may be used
to directly solicit a sale of goods or services, or to extend credit for the sale. See TEX. BUS. & COM.
CODEANN. $5 37.01(4) (defining “consumer telephone call”), (5) (defining “telephone solicitor”)
(Vernon Supp. 1999). Section 37.02(a) provides that the telephone solicitor may not make such a
call unless the solicitor immediately identities himself or herself, the business on whose behalf the
call is being made, and the purpose of the call, id. 4 37.02(a)(l); the call is made after 9:00 a.m. but
before 9:00 p.m. on a weekday or Saturday and after 12:00 noon but before 9:00 p.m. on a Sunday;
id. 5 37.02(a)(2); and, if an automated dial-announcing       device is used, where possible, the call is
disconnected thirty seconds after it is terminated by either the consumer or the telephone solicitor,
id. 4 37.02(a)(3).’

         ‘House Bill 450, enacted by the 76th Legislature   and effective   September   1, 1999, requires such calls to be
                                                                                                            (continued...)
Mr. Wayne Thorburn        - Page 3                     (X-0078)

       Certain telephone solicitations are exempted from the tbreerequirements   ofsection 37.02(a).
Under section 37.02(b), a consumer telephone call is not subject to those requirements if the call is
made:

                      (1) in response to the express request of the consumer;

                      (2) primarily in connection with an existing debt or contract for
                  which payment or performance has not been completed at the time of
                  the call; or

                      (3) to a consumer with whom the telephone solicitor has a prior
                  or existing business relationship.

Id. 5 37.02(b).

         Finally, section 37.03 prohibits a telephone solicitor from charging to consumer credit card
accounts unless one of the following requirements are met: the seller (1) provides for cancellation
of services upon notice from the consumer not later than the seventh day after the date the consumer
“receives the goods or services” and a full refund not later than the thirtieth day after the consumer
cancels the contract for services not performed or a pro rata refund for any services not yet
performed; (2) provides to and receives from the consumer a written contract describing the services,
the total price, the name, address, and business phone of the company and any terms or conditions
affecting the sale; or (3) the seller is exempt horn federal taxes under section 501(c)(3) of the
Internal Revenue Code. Id. $37.03 (Vernon Supp. 1999).

         Although chapter 37 has been in effect since 1992; we have found no Texas cases construing
its provisions. However, based on the plain language of the statute, we conclude in answer to your
first question that chapter 37 applies to unsolicited telephone calls by a residential service company
for the purpose of selling a new contract. See id. 5s 37.01(4) (defining “consumer telephone call”),
(5) (defining “telephone solicitor”); TEX. REV. CIV. STAT. ANN. art. 6573b, § 4(a) (Vernon Supp.
1999) (definition of “residential service contract”). But the section 37.02(a) provisions dealing with
when and how the calls must be made do not apply to such calls to a consumer who held or holds
a residential service contract issued by that company. Section 37.02(b)(3) specifically provides that
subsection (a) does not apply to a consumer telephone call if made “to a consumer with whom the
telephone solicitor has aprior or existing business relationship.” (Emphasis added.) Whether the
telephone calls soliciting the sale of a new contract are made after or before the initial contract term
expires, the calls fall within the exception of subsection (b)(3).

          ‘(...continued)
disconnected five seconds after the call is terminated. See Act of May 26, 1999,76th     Leg., R.S., H.B. 450, 5 1 (to be
codified at TEX. BUS. & COM. CODE ANN. 5 37.02(a)(3)).

         %e   Act of May 26,1991,72d    Leg., RX, ch. 494.5       1,199l   Tex. Gen. Laws 1736.
Mr. Wayne Thorbum       - Page 4                 W-0078)

         Because section 37.02(b)(3) exempts qualifying calls only from the requirements of section
37.02(a), however, the section 37.03 restrictions on charges to consumer credit card accounts would
still apply. Consequently, if a residential service contract is sold by a telephone solicitation, the
residential service company may not make any charges to the consumer’s credit account unless the
company complies with those restrictions. Accordingly, in answer to your second question, the
rights of a consumer and the obligations of a licensed residential service company with respect to
notice, cancellation, and refund are as set out in section 37.03 if an amount is to be charged to the
consumer’s credit account.

        We turn now to your next three questions, which relate to chapter 39 of the Business and
Commerce Code. You first ask if chapter 39 applies to “solicitations of the sale of a residential
service contract by a licensed real estate broker or salesperson at a location other than the licensee’s
office, such as at a home being listed or shown to a prospective buyer?’ See Request Letter of
7/22/98. Baaed on the information provided, we understand you to ask about the sale of a contract
providing initial residential service coverage when a home is purchased.

          Chapter 39 gives consumers the opportunity to cancel certain transactions. A consumer may
cancel a transaction subject to the statute before midnight of the third business day after the
consumer signs an agreement or offers to purchase real or personal property, services, money, or
credit for personal or household purposes.        See TEX. Bus. & COM. CODE ANN. $3 39.001(l)
(definition of “consumer”), 39.003 (right to cancel) (Vernon Supp. 1999). It requires a merchant to
provide a consumer a receipt or copy of a contract at the time it is executed and to include in it
certain information and forms of notices of cancellation. Id. 5 39.004(a) - (c). Additionally, the
statute sets out the rights, duties and obligations of a merchant and a consumer with respect to
compensation for services and retention and return of property, id. $5 39.005, .006, ,007, and acts
that constitute violations of the Act and the penalties for such violations. Id. 9 39.008. Among other
penalties, a sale or contract made in violation of the statute is void. Zd: 5 39.008(b).

         Chapter 39 does not limit its application to door-to-door salesmen or contracts made at the
consumer’s home although originally enacted for that purpose. See Act ofMay 27,1995,74th Leg.,
R.S, ch. 926, $ 1, 1995 Tex. Gen. Laws 4649 (redefining “home solicitation transaction” to include
transaction in which merchant engages in personal solicitation of consumer at place other than
merchant’s place ofbusiness and not only residence); McDaniel Y. Pettigrew, 536 S.W.2d 611,614
(Tex. Civ. App.-Dallas 1976, writ ref d n.r.e.) (discussing original intent). It generally applies to
any consumer transaction consummated at a place other than the seller’s place ofbusiness.    Section
39.002 sets out the transactions to which chapter 39 applies and provides as follows:

                     (a) This chapter applies only to a consumer transaction   in which
                the merchant or the merchant’s agent engages in a              personal
                solicitation of a sale to the consumer at a place other        than the
                merchant’s place ofbusiness, and the consumer’s agreement        or offer
Mr. Wayne Thorbum        - Page 5                 (X-0078)

               to purchase is given to the merchant or the merchant’s           agent at a
               place other than the merchant’s place of business:

                      (1) for the purchase of goods or services for consideration       that
               exceeds $25 payable in installments or in cash; or

                      (2) for the purchase of real property for consideration           that
               exceeds $100 payable in installments or in cash.

                     (b) Notwithstanding   Subsection     (a), this chapter does not apply
               to:

                         (1) a purchase of farm equipment;

                       (2) an insurance    sale regulated by the Texas Department         of
               Insurance;

                         (3) a sale of goods or services made:

                            (A) under a preexisting        revolving   charge account     or
               retail charge agreement; or

                           (B) after negotiations between the parties at a business
               establishment at a fixed location where goods or services are offered
               or exhibited for sale; or

                         (4) a sale of real property iE

                             (A)   the purchaser is represented    by a licensed attorney;

                             (B)   the transaction is negotiated by a licensed real estate
               broker; or

                             (C) the transaction is negotiated at a place other than the
               consumer’s     residence by the person who owns the property.

TEX.  Bus. & COM. CODE ANN. 5 39.002 (Vernon Supp. 1999). “Consumer transaction” for the
purposes of section 39.002(a) is “a transaction in which one or more of the parties is a consumer.”
Id. 5 39.001(2). “Consumer,” in turn, is “an individual who seeks or acquires real or personal
property, services, money, or credit for personal, family, or household purposes[,]” and “merchant”
is “a party to a consumer transaction other than a consumer.”          Id. 5 39.001(l), (3). Lastly,
Mr. Wayne Thorburn      - Page 6                 UC-0078)

“merchant’s place of business,” in relevant part, is the “merchant’s main or permanent branch office
or local address.” Id. 5 39.001(4).

          Sale of a residential service contract on its face partially satisfies the consumer transaction
definition of section 39.002(a) in that a consumer in such transaction seeks or acquires services and
goods for household purposes. See TEX. REV. CIV. STAT. ANN. art. 6573b, 5 4(a) (Vernon Supp.
1999) (definition of “residential service contract”). To constitute a consumer transaction to which
chapter 37 applies, however, it must also involve (1) a solicitation by a “merchant or merchant’s
agent” and (2) an agreement to purchase at a place other than the merchant’s place of business. We
address each of these more complex and factually based requirements in turn.

        It is not clear that the real estate broker or salesperson is a “merchant or merchant’s agent.”
The few Texas cases that have considered the statute, have not construed this term. See American
Quality Roofing v. Ipock, Inc., 730 S.W.2d 470 (Tex. App.-Fort Worth 1987, no writ) (roof repair
contract made at consumer’s home subject to statute); Langston v. Brewer, 649 S.W.2d 827 (Tex.
App.-Fort Worth 1983, no writ) (remodeling contract not subject to statute because parties had
engaged in prior transaction, consumer contacted merchant, and parties had negotiated contract away
from consumer’s residence before its execution); Homquest v. Priesmeyer, 574 S.W.2d 173 (Tex.
Civ. App.-Houston       [lst Dist.] 1978, no writ) (architect contract not subject to statute because
consumer sought architect’s services and engaged in negotiations away from consumer’s home
before contract was prepared); McDaniel v. Pettigrew, 536 S.W.2d 611 (Tex. Civ. App.-Dallas
1976, writ refd n.r.e.) (statute does not apply to real estate transaction contract negotiated by
licensed real estate broker; additionally, consumers not builders engaged in solicitation). Based on
the statutory language, the broker or salesperson is not the “merchant” as defined in the statute,
because the party other than the consumer to the residential service transaction is the residential
service company. But if the broker or salesperson solicits the sale of the contract, he or she is acting
on behalf of the residential service company and likely would be considered the merchant’s agent.
See McDaniel, 536 S.W.2d at 615 (provisions of statute must be liberally construed to effect its
object); I OXFORD ENGLISH DICTIONARY248 (2d ed. 1989) (defining “agent,” as relevant here, as
“one who acts for another”); BLACK'S LAW DICTIONARY 59 (5th ed. 1979) (defining “agent”
generally as one who represents or acts for another under contract or agency relation). Whether a
person acts in any particular case as an agent for another, however, is a factual determination.

         Additionally, to constitute a consumer transaction described by subsection (a), the seller or
the prospective home buyer must also agree to purchase the residential services at the home being
shown or at a place other than the merchant’s place of business. Thus, if the home seller or the home
buyer agrees to purchase the residential services at the home or at a place other than the merchant’s
place of business, the residential service sale solicitation is a consumer transaction described in
section 39.002(a). The location where the agreement is given or the contract executed would
necessarily vary with each case and its determination would therefore require a case-by-case
analysis.
Mr. Wayne Thorbum       - Page 7                  (X-0078)

         In sum, a residential service sale solicitation by a licensed real estate broker or salesperson
at a home being listed or shown to a prospective buyer is a consumer transaction described in section
39.002(a) to which chapter 39 applies if the following criteria are met: (1) the broker or salesperson
acts as the agent of the residential service company, and (2) the home seller or the home buyer agrees
to purchase the services at the home being shown or at a place other than the merchant’s place of
business.

         But a residential service contract sale that is a consumer transaction under section 39.002(a)
to which chapter 39 otherwise applies, might be, in certain circumstances, excluded from the
application of chapter 39 under section 39.002(b).

         A residential service contract sale is plainly not the purchase of farm equipment or made
under a preexisting revolving or retail charge account. Nor is such a contract the purchase of real
property. Rather, the contract is for the sale of residential repair, maintenance, and replacement
services that may result in improvements to realty or in installation ofitems that may become affixed
to the realty, but it is not for the sale of the realty itself. See TEX. REV. CIV. STAT. ANN. art. 6573b,
5 4(a) (Vernon Supp. 1999). Although we found no cases in Texas or in otherjurisdictions         that deal
with residential service or similar contracts, we note that home remodeling or repair contracts, which
also result in improvements to realty or in installation of items that become affixed to a home, have
generally not been excepted under the realty exception to home solicitation statutes. See American
QualityRoojing,Inc.,      730 S.W,2d470(roofrepaircontract        subjectto statute); Lungston,   S.W.2d
827 (remodeling of garage as beauty shop excepted from statute because of prior relationship
between parties); R. Bauer & Sons Roofing & Siding, Inc. v. Kinder-man, 613 N.E.2d 1083 (Ohio Ct.
App. 1992) (contract for installation of roof, windows and door not covered by realty exception);
Crystal v. West & Callahan, Inc., 614 A.2d 560 (Md. Ct. App. 1992) (contract to improve porch not
covered by real estate exception even though it resulted in improvements to realty). Additionally,
purchase of a residential service contract is optional and not a condition of the sale of the realty.
TEX. REV. CIV. STAT. ANN. art. 6573b, 5 1 l(e) (Vernon Supp. 1999). Therefore, purchase of the
service contract is not such an integral part of the real property sale so as to constitute a sale of real
property.

        A residential service contract is also not an insurance sale regulated by the Texas Department
of Insurance. The sale in question involves a sale of residential repair services and residential
appliances and fixtures regulated by the Commission rather than an insurance sale regulated by the
Texas Department ofInsurance. See id. 5 2(a) (provisions of insurance law not applicable to service
company licensed under Residential Service Company Act; provisions of Act inapplicable to
insurance company licensed and regulated by insurance laws of state), (b) (Act inapplicable to ‘home
warranty insurance’ as defined by TEX. INS. CODE ANN. art. 5.53-A, 5 2 (Vernon 1981)).

         While not a sale of farm equipment, real property, or insurance, or a sale made under a
preexisting revolving or retail charge account, a residential service contract sale may, nonetheless,
fall under section 39,002(b)(3)(B).   Subsection (b)(3)(B) excludes the sale of services “made after
negotiations between the parties at a business establishment at a fixed location where goods or
Mr. Wayne Thorburn        - Page 8                (JC-0078)

services are offered or exhibited for sale.” Again, whether the parties have engaged in such
negotiations before the sale of the residential services would vary in each case and its determination
would therefore require a case-by-case analysis.

         Thus, a solicitation for a residential service contract sale by a licensed real estate broker or
salesperson otherwise subject to chapter 39, might, nevertheless, be excluded from the application
of chapter 39 if the parties engaged in prior negotiations at a fixed business establishment where the
goods and services are offered for sale.

         If chapter 39 applies, you next ask whether a licensed residential company must include in
the residential service contract the statutory notice and cancellation form required under section
39.004. Any document pertaining to a consumer transaction provided to a consumer must contain
a statement, substantially in the form provided by the statute, that the buyer has the right to cancel
the transaction at any time before midnight of the third business day after the date of the transaction.
TEX. Bus. & COM. CODEANN. § 39.004(b)(4) (V emon Supp. 1999). Additionally, the document
must include a duplicate notice-of-cancellation   form setting forth the buyer’s right to cancel within
the three-day period; the buyer’s right to have any property traded in or payment made and any
negotiable instrument executed by the buyer returned within ten days of receipt of the cancellation
notice; the buyer’s obligation to return any goods delivered under the contract; the buyer’s right to
retain the goods under certain circumstances; and directions regarding what the buyer must do with
 the form provided to cancel the transaction. Id. 5 39.004(c).

         Generally, if a transaction is a consumer transaction governed by chapter 39, the statutory
notice and cancellation provisions of section 39.004 do apply. A document need not, however,
include the forms and notices required under that section in certain circumstances.     First, the “use
of the forms and notices of the right to cancel prescribed by the Federal Trade Commission’s trade-
regulation rule providing a cooling-off period for door-to-door sales constitutes compliance with
th[e] section.” Id. $39.004(d).     Second, a transaction in which the contract price does not exceed
$200 is deemed to comply with the notice requirements if:

                        (1) the consumer may at any time cancel the order, refuse to
                   accept delivery of the goods without incurring any obligation to pay
                   for them, or return the goods to the merchant and receive a full refund
                   of the amount the consumer has paid; and

                        (2) the consumer’s right to cancel the order, refuse delivery, or
                   return the goods without obligation or charge at any time is clearly
                   and conspicuously set forth on the face or reverse side of the sales
                   ticket.

Id. 5 39.004(e).
Mr. Wayne Thorbum       - Page 9                (X-0078)

         Assuming the transaction you ask about is a consumer transaction to which chapter 39
applies, the residential service contract must include the notice and cancellation form required by
section 39.004 unless the following requirements are met: (1) the contract includes forms and
notices required by the Federal Trade Commission’s trade-regulation rule with respect to door-to-
door sales, or (2) the contract price does not exceed $200 and the consumer may at any time cancel
the contract and receive a full refund, which cancellation right is “clearly and conspicuously” set
forth in the contract. See 16 C.F.R. 53 429.0,429.1-.3 (1998) (Rule Concerning Cooling-OffPeriod
for Sales Made at Homes or at Certain Other Locations).

        Finally, if chapter 39 applies, you ask “would a licensed residential service company violate
the Code if it provided a consumer with a cancellation period greater than three days or deleted
language relating to the sale of goods 7” See Request Letter of 7122198.

        Section 39.003 gives the consumer the right to cancel “not later than midnight of the third
business day after the date the consumer signs an agreement or offer to purchase.” TEX. Bus. &
COM. CODE ANN. 9 39.003 (Vernon Supp. 1999) (emphasis added).                Section 39.008(a)(l)(D)
provides that a merchant may not fail to include in the form of cancellation prescribed by the statute
“a date not earlier than the third business day after the date of the transaction by which the
consumer must give notice of cancellation.” Id. 5 39.008(a)(l)(D) (emphasis added).

         No Texas case has considered whether providing a cancellation period greater than three days
violates the above statutory provisions. However, based on the purpose of the statute and its literal
language, we believe that the provision of a cancellation period greater than three days does not
violate chapter 39. The statute’s purpose is to protect consumers by giving them at least a three-day
period in which to cancel a contract executed pursuant to a personal solicitation at a place other than
the seller’s place of business. Thus, the consumer is entitled to at least three days. Although the
consumer is not entitled to more than a three-day cancellation period, clearly a seller may choose to
provide more. Providing the consumer additional protection does not, in our opinion, contravene
the statute’s minimum protective measures.

         You also ask whether a residential service company would violate chapter 39 if it deleted
language with respect to the sale of goods in a contract. As discussed above, section 39.004 requires
that a contract subject to chapter 39 contain a notice of cancellation in the form provided in the
statute. Subsection (c)(3) of section 39.004 sets out the language to be included in the form,
including two paragraphs dealing with the consumer’s rights and obligations with respect to return
of any goods delivered under a contract upon cancellation of the contract.

        Again, no Texas case has considered whether deleting a portion of the section 39.004(c)(3)
language violates chapter 39. However, we note that there is no statutory provision for deleting or
modifying the required language. The notice required here is different from that for the deadline to
cancel. The form in the latter instance gives the discretion to include a date that is later than the
required minimum three days. See id. 4 39.008(a)(l)(D).       But there is no similar discretion to
modify the section 39,004(c)(3) language. Accordingly, assuming a residential service contract is
Mr. WayneThorburn      - Page   10                (JC-0078)

subject to chapter 39, we conclude the statutorily required language with respect to goods must be
included in the notice of cancellation in the contract. Therefore, deleting such language would
violate the statute.

                                        SUMMARY

                        Chapter 37 of the Business and Commerce Code applies to
               unsolicited telephone calls made by a residential service company for
               the purpose of selling residential service contracts. Accordingly, the
               rights of a consumer and the obligations of a licensed residential
               service company with respect to notice, cancellation, and refund are
               as set out in chapter 37 if an amount is to be charged to the
               consumer’s credit account. However, an unsolicited telephone call
               to sell a new contract to a consumer who held or holds such a contract
               is excepted from chapter 37’s requirements dealing with when and
               how consumer telephone calls must be made.

                        Chapter 39 of the Business and Commerce Code applies to
               residential service contract solicitations by a licensed real estate
               broker or salesperson at a home being listed or shown if (1) the
               broker or salesperson is acting as the agent for the residential service
               company, and (2) the purchaser agrees to purchase the services at the
               home or a place other than the merchant’s place of business.
               However, such a transaction may be excepted from chapter 39 if the
               parties engaged      in prior negotiations     at a fixed business
               establishment.

                        If a transaction is subject to chapter 39, the residential service
               contract must include the notice and cancellation form as required by
               section 39.004. A residential service contract subject to chapter 39
               that provides a cancellation period greater than three days would not
               violate chapter 39. A residential service contract subject to chapter
               39 that does not include the statutorily required language with respect
               to the return of goods sold would violate chapter 39.

                                              4 ,c
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                                                  JOHN     CORNYN
                                                  Attorney General of Texas
Mr. Wayne Thorbum      - Page   11          (~~-0078)

ANDY TAYLOR
First Assistant Attorney General

CLARK KENT ERVIN
Deputy Attorney General - General Counsel

ELIZABETH ROBINSON
Chair, Opinion Committee

Prepared by Sheela Rai
Assistant Attorney General