BILL NUMBER: AB 2704 CHAPTERED
BILL TEXT
CHAPTER 196
FILED WITH SECRETARY OF STATE JULY 21, 1998
APPROVED BY GOVERNOR JULY 20, 1998
PASSED THE ASSEMBLY JULY 7, 1998
PASSED THE SENATE JULY 2, 1998
AMENDED IN SENATE JUNE 29, 1998
AMENDED IN SENATE JUNE 17, 1998
AMENDED IN ASSEMBLY MAY 12, 1998
INTRODUCED BY Assembly Member Alquist
(Coauthor: Senator Watson)
FEBRUARY 23, 1998
An act to amend Section 9855 of the Business and Professions Code,
and to amend Section 1791 of the Civil Code, relating to service
contracts.
LEGISLATIVE COUNSEL'S DIGEST
AB 2704, Alquist. Service contracts.
Existing law regulating the activities of service contractors,
including service contract sellers, defines a service contract seller
as a person who sells or offers to sell a service contract for the
maintenance or repair of electronic sets or appliances, as defined.
Existing law regulating consumer warranties provides for
substantially the same definition of a "service contract seller" with
respect to the maintenance or repair of consumer products, as
defined. Under existing law, a "service contract" is defined to
relate to the maintenance or repair of consumer products.
This bill would add to the definition of "service contract seller"
or "seller," for purposes of both regulatory laws, a person who is
the obligor, as defined, under a service contract sold by the seller,
manufacturer, or repairer of the product covered by the service
contract. The bill also would revise the definition of "service
contract" to include the replacement of consumer products. The bill
also would revise the definition of "home appliance" for the
provisions relating to consumer warranties to include any kind of
appliance product.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 9855 of the Business and Professions Code is
amended to read:
9855. The definitions used in this section shall govern the
construction and terms as used in this chapter:
(a) "Service contract" means a contract in writing to perform,
over a fixed period of time or for a specified duration, services
relating to the maintenance, replacement, or repair of a set or
appliance as defined by this chapter.
(b) "Service contract administrator" or "administrator" means a
person, other than a service contract seller or an insurer admitted
to do business in this state, who performs or arranges, or has an
affiliate who performs or arranges, the collection, maintenance, or
disbursement of moneys to compensate any party for claims or repairs
pursuant to a service contract, and who also performs or arranges, or
has an affiliate who performs or arranges, any of the following
activities on behalf of service contract sellers:
(1) Providing service contract sellers with service contract
forms.
(2) Participating in the adjustment of claims arising from service
contracts.
(3) Arranging on behalf of service contract sellers the insurance
required by Section 9855.2.
A service contract administrator shall not be an obligor on a
service contract.
(c) "Service contract seller" or "seller" means a person who sells
or offers to sell a service contract to a service contractholder,
including a person who is the obligor under a service contract sold
by the seller, manufacturer, or repairer of the product covered by
the service contract.
(d) "Service contractholder" means a person who purchases or
receives a service contract from a service contract seller.
(e) "Service contractor" means a service contract administrator or
a service contract seller.
(f) "Service contract reimbursement insurance policy" means a
policy of insurance issued by an insurer admitted to do business in
this state providing coverage for all obligations and liabilities
incurred by a service contract seller under the terms of the service
contracts sold in this state by the service contract seller to a
service contractholder. The service contract reimbursement insurance
policy shall either cover all service contracts sold or specifically
cover those contracts sold to residents of the State of California.
(g) "Obligor" is the entity financially and legally obligated
under the terms of a service contract.
SEC. 2. Section 1791 of the Civil Code is amended to read:
1791. As used in this chapter:
(a) "Consumer goods" means any new product or part thereof that is
used, bought, or leased for use primarily for personal, family, or
household purposes, except for clothing and consumables. "Consumer
goods" shall include new and used assistive devices sold at retail.
(b) "Buyer" or "retail buyer" means any individual who buys
consumer goods from a person engaged in the business of
manufacturing, distributing, or selling consumer goods at retail. As
used in this subdivision, "person" means any individual,
partnership, corporation, limited liability company, association, or
other legal entity that engages in any such business.
(c) "Clothing" means any wearing apparel, worn for any purpose,
including under and outer garments, shoes, and accessories composed
primarily of woven material, natural or synthetic yarn, fiber, or
leather or similar fabric.
(d) "Consumables" means any product that is intended for
consumption by individuals, or use by individuals for purposes of
personal care or in the performance of services ordinarily rendered
within the household, and that usually is consumed or expended in the
course of consumption or use.
(e) "Distributor" means any individual, partnership, corporation,
association, or other legal relationship that stands between the
manufacturer and the retail seller in purchases, consignments, or
contracts for sale of consumer goods.
(f) "Independent repair or service facility" or "independent
service dealer" means any individual, partnership, corporation,
association, or other legal entity, not an employee or subsidiary of
a manufacturer or distributor, that engages in the business of
servicing and repairing consumer goods.
(g) "Lease" means any contract for the lease or bailment for the
use of consumer goods by an individual, for a term exceeding four
months, primarily for personal, family, or household purposes,
whether or not it is agreed that the lessee bears the risk of the
consumer goods' depreciation.
(h) "Lessee" means an individual who leases consumer goods under a
lease.
(i) "Lessor" means a person who regularly leases consumer goods
under a lease.
(j) "Manufacturer" means any individual, partnership, corporation,
association, or other legal relationship that manufactures,
assembles, or produces consumer goods.
(k) "Place of business" means, for the purposes of any retail
seller that sells consumer goods by catalog or mail order, the
distribution point for these goods.
(l) "Retail seller," "seller," or "retailer" means any individual,
partnership, corporation, association, or other legal relationship
that engages in the business of selling or leasing consumer goods to
retail buyers.
(m) "Return to the retail seller" means, for the purposes of any
retail seller that sells consumer goods by catalog or mail order, the
retail seller's place of business, as defined in subdivision (k).
(n) "Sale" means (1) the passing of title from the seller to the
buyer for a price, or (2) a consignment for sale.
(o) "Service contract" means a contract in writing to perform, for
an additional cost, over a fixed period of time or for a specified
duration, services relating to the maintenance, replacement, or
repair of a consumer product, except that this term does not include
a policy of automobile insurance, as defined in Section 116 of the
Insurance Code.
(p) "Service contract administrator" or "administrator" means a
person, other than a service contract seller or an insurer admitted
to do business in this state, who performs or arranges, or has an
affiliate who performs or arranges, the collection, maintenance, or
disbursement of moneys to compensate any party for claims or repairs
pursuant to a service contract, and who also performs or arranges, or
has an affiliate who performs or arranges, any of the following
activities on behalf of service contract sellers:
(1) Providing service contract sellers with service contract
forms.
(2) Participating in the adjustment of claims arising from service
contracts.
(3) Arranging on behalf of service contract sellers the insurance
required by Section 9855.2. A service contract administrator shall
not be an obligor on a service contract.
(q) "Service contract seller" or "seller" means a person who sells
or offers to sell a service contract to a service contractholder,
including a person who is the obligor under a service contract sold
by the seller, manufacturer, or repairer of the product covered by
the service contract.
(r) "Service contractor" means a service contract administrator or
a service contract seller.
(s) "Assistive device" means any instrument, apparatus, or
contrivance, including any component or part thereof or accessory
thereto, that is used or intended to be used, to assist an individual
with a disability in the mitigation or treatment of an injury or
disease or to assist or affect or replace the structure or any
function of the body of an individual with a disability, except that
this term does not include prescriptive lenses and other ophthalmic
goods unless they are sold or dispensed to a blind person, as defined
in Section 19153 of the Welfare and Institutions Code, and unless
they are intended to assist the limited vision of the person so
disabled.
(t) "Catalog or similar sale" means a sale in which neither the
seller nor any employee or agent of the seller nor any person related
to the seller nor any person with a financial interest in the sale
participates in the diagnosis of the buyer's condition or in the
selection or fitting of the device.
(u) "Home appliance" means any refrigerator, freezer, range,
microwave oven, washer, dryer, dishwasher, garbage disposal, trash
compactor, room air-conditioner, or other kind of appliance product
normally used or sold for personal, family, or household purposes.
(v) "Home electronic product" means any television, radio, antenna
rotator, audio or video recorder or playback equipment, video
camera, video game, video monitor, computer equipment, telephone,
telecommunications equipment, electronic alarm system, electronic
appliance control system, or other kind of electronic product, if it
is normally used or sold for personal, family, or household purposes.
The term includes any electronic accessory that is normally used or
sold with a home electronic product for one of those purposes. The
term excludes any single product with a wholesale price to the retail
seller of less than fifty dollars ($50).
(w) "Obligor" is the entity financially and legally obligated
under the terms of a service contract.
This section shall remain in effect only until January 1, 2003,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2003, deletes or extends that date.