Business and property owners, creditors and other commercial parties in Connecticut must draft their consumer contracts carefully in order to avoid unintended consequences and ensure that they are enforceable.  This is because Connecticut’s consumer protection laws invalidate certain provisions which are commonly found in consumer contracts.  These laws also grant various rights to consumers which are not contained in, and which may expressly contradict, the provisions in their contracts.  Violations of the laws governing consumer contracts can subject unwary companies to, among other things, substantial civil penalties and damages.     

Consumer contracts are typically defined as the contracts that individuals enter into primarily for personal, family or household purposes. They include, but are not limited to, retail sales and service agreements and residential leases.  The following are some examples of the legal requirements and restrictions that apply to some common consumer contract provisions under Connecticut law:           

Automatic Renewal Provisions. A consumer contract having a term of at least 180 days and which automatically renews for a period of more than 30 days is invalid unless written notice advising the consumer of his or her right to cancel the contract is provided at least 15 days, but not more than 60 days, before the earlier of: (a) the end of the contract term; or (b) the expiration date of the consumer’s right to cancel the contract prior to the end of the term.

Attorneys’ Fee Provisions.  Consumer contracts allowing for an award of attorneys’ fees to the commercial party only upon a breach are automatically deemed to include a reciprocal right for the consumers to receive an award of their attorneys’ fees upon any breach by the owner.  In addition, the amount of attorneys’ fees that the commercial party may recover for a breach of contract are capped at 15% of the total recovery regardless of what the contract says.   

Cancellation Rights.  Consumers have, and must be provided with written notice of, a 3- business day right to cancel certain consumer contracts, including but not limited to home improvement contracts, health club contracts, dating service contracts and diet and/or weight reduction program contracts.  Contracts which do not contain a legally required written notice of the consumer’s cancellation rights will generally be deemed invalid.    

Plain Language Requirement.  Consumer contracts must be written in plain language to enhance the consumers’ ability to understand them.  The applicable statute contains a specific method for complying with the plain language requirement (which includes limitations on the average number of words and sentences in the contract) and a more general compliance method. 

With so many contract forms available online, commercial parties are often tempted to prepare their own contracts without realizing that the forms do not comply with applicable Connecticut law.  Accordingly, before entering into any contract with a consumer, commercial parties should consult with an attorney who is familiar with Connecticut’s consumer protection laws to ensure that they do not unknowingly violate them.  For more information, please contact Mark W. Klein (mklein@brodywilk.com).