AB 2365, as amended, John A. Pérez. Contracts: unlawful contracts.
Existing law generally regulates formation and enforcement of contracts, including what constitutes an unlawful contract. Under existing law a contract is unlawful if it is contrary to an express provision of law, contrary to the policy of express law, though not expressly prohibited, or otherwise contrary to good morals.
This bill would declare a contract or proposed contract for the sale or lease of consumer goods or services unlawful if it contains a provision requiring the consumer to waive his or her right to make any statement regarding the consumer’s experience withbegin delete the business,end deletebegin insert a seller or lessor or its employees or agents,end insert unless the waiver was
knowing, voluntary, and intelligent, as specified.begin insert The bill would make it unlawful to threaten or seek to enforce, a provision made unlawful under the bill, or to otherwise penalize a consumer for making any statement regarding the consumer’s experience with a seller or lessor, or its employees or agent, absent the consumer’s knowing, voluntary, and intelligent waiver of his or herend insertbegin insert right to do so.end insert The bill would impose civil penaltiesbegin delete in an unspecified amountend delete upon any person who violates the provisions of the bill,begin insert of $2,500 for the initial violation and $5,000 for each subsequent violation,end insert as well as an
additional penaltybegin delete in an unspecified amountend deletebegin insert of $10,000end insert ifbegin delete thatend deletebegin insert theend insert
violation was willful, intentional, or reckless. The bill would authorize the consumer, the Attorney General, or a district attorney or city attorney to bring a civil action for a violation of the provisions of the bill. The bill would provide that the penalty set forth in the bill is not an exclusive remedy, and does not affect any other relief or remedy provided by law.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 1670.8 is added to the Civil Code, to
2read:
(a) begin insert(1)end insertbegin insert end insert A contract or proposed contract for the sale
4or lease of consumer goods or services is unlawful if it includes a
5provision requiring the consumer to waive his or her right to make
6any statement regarding the consumer’s experience with the
7begin delete business, or to threaten or seek to enforce such a provision or to begin insert
seller
8otherwise penalize a consumer for making such a statementend delete
9or lessor or its employees or agentsend insert, unless the waiver of this right
10was knowing, voluntary, and intelligent.begin delete A provision in violation
11of this section is unconscionable and against public policy.end delete
12(2) It shall be unlawful to threaten or seek to enforce a provision
13made unlawful under this section, or to otherwise penalize a
14consumer for making any statement regarding the consumer’s
15experience with a seller or lessor, or its employees or agent, unless
16the consumer has knowingly, voluntarily, and intelligently waived
17his or her right to do so.
18(b) The party that drafted the waiver provision has the
burden
19of proving that the waiver was knowing, voluntary, and intelligent.
20(c) Any waiver of the provisions of this section is contrary to
21public policy, and is void and unenforceable.
22(d) Any person who violates this section shall be subject to a
23civil penalty not to exceedbegin delete ____ dollars ($____)end deletebegin insert two thousand five
24hundred dollars ($2,500)end insert for the firstbegin delete violation and ____ dollars begin insert violation, and five thousand dollars ($5,000) for the second
25($____)end delete
26andend insert
for each subsequent violation, to be assessed and collected in
27a civil action brought by the consumer, by the Attorney General,
28or by the district attorney or city attorney of the county or city in
29which the violation occurred. When collected, the civil penalty
30shall be payable, as appropriate, to the consumer or to the general
P3 1fund of whichever governmental entity brought the action to assess
2the civil penalty.
3(e) In addition, for a willful, intentional, or reckless violation
4of this section, a consumer or public prosecutor may recover a
5civil penalty not to exceedbegin delete ____ dollars ($ ____)end deletebegin insert ten thousand
6dollars ($10,000)end insert.
7(f) The penalty provided by this section is not an exclusive
8remedy, and does not affect any other relief or remedy provided
9by law.
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