General Business Law Section 394-B
Limitations on certain contracts for instruction or use of physical or social training facilities
1.(a) “Total contract price” shall mean the total cash price paid or to be paid by the buyer for instruction or services which are the subject of the written contract.
(b)“Notice of cancellation” shall be deemed to have been provided by a buyer by mailing or delivering written notification to cancel the contract to the seller or by failing to attend instructional facilities for a period of five consecutive appointment days on which classes or the provisions of services which are the subject of the contract were prearranged with the buyer.
(c)“Reasonable and fair service fee” shall mean no more than ten percent of the total contract price for contracts of one thousand dollars and under. For contracts over one thousand dollars, reasonable and fair service fee shall mean no more than one hundred dollars plus an amount equal to five percent of the total contract price over one thousand dollars, not to exceed two hundred fifty dollars.
(d)“Initial contract” shall mean the buyers first contract for services. Subsequent contracts shall be referred to as renewals. Contracts for services which are entered into, after a lapse of contractual service for a period of twelve consecutive months, shall be deemed to be initial contracts.
2.Any contract for instruction in physical or social skills, or for the use by an individual patron of a dance hall studio, ballroom, or other physical or other social training facility, which is measured by the life of the person receiving such instruction or the use of such physical or social training facility as an individual patron, shall be deemed void and unenforceable as contrary to public policy.
3.Any initial contract for instruction in physical or social skills, or for the use by an individual patron of a dance hall studio, ballroom, or other physical or social training facility which requires payment by the person receiving such instruction, or the use of such physical or social training facilities, of a total amount in excess of five hundred dollars, or granting to the person furnishing such instruction or providing the use of such facilities, an automatic renewal option where the payments to be made during the original contract period and the option period combined are in excess of five hundred dollars, shall be valid and enforceable only if:
(a)The term of the contract shall be for a precisely measured period of years, or any definite part thereof; and
(b)the payments to be made thereunder shall be in instalments so computed that the total amounts so paid shall not exceed by more than five percent the prorated cost of the units of instruction or use actually received thereunder at the time the latest payment is made; or, if no definite number of units of instruction or use is specified in the contract, the total amount so paid shall not exceed by more than five percent the proportion of the total contract price that the expired portion of the entire term bears to the whole term of the contract.
4.No contract for services shall be assigned without written consent of the person receiving such instruction or for the use of such physical or social training facility.
5.(a) Every contract for services shall provide that such contract may be canceled at any time. Notice of cancellation shall be delivered or mailed by certified or registered United States mail at the address specified in the contract. Such contract shall contain the following written information in at least ten point type: "CONSUMERS RIGHT TO CANCELLATION. YOU MAY CANCEL THIS CONTRACT AT ANY TIME BY DELIVERING OR MAILING BY CERTIFIED OR REGISTERED UNITED STATES MAIL TO THE ADDRESS SPECIFIED IN THE CONTRACT. IF YOU CANCEL THE CONTRACT WITHIN THREE (3) DAYS FROM THE DATE OF RECEIPT, YOU WILL BE ENTITLED TO A FULL REFUND. TO CANCEL A CONTRACT WITHIN THREE (3) DAYS FROM THE DATE OF RECEIPT BY REGISTERED OR CERTIFIED MAIL, SUCH MAIL MUST BE POSTMARKED WITHIN THE THREE (3) DAY PERIOD. AFTER THE THREE (3) DAY PERIOD, YOU MAY BE ASSESSED A REASONABLE AND FAIR SERVICE FEE. IF YOU UTILIZED SERVICES AND SUBSEQUENTLY CANCEL THE CONTRACT, YOU WILL BE CHARGED ONLY FOR INSTRUCTION SERVICES ACTUALLY FURNISHED AND A REASONABLE AND FAIR SERVICE FEE, AS DEFINED IN PARAGRAPH (C) OF SUBDIVISION 1 OF General Business Law § 394-B (Limitations on certain contracts for instruction or use of physical or social training facilities)SECTION 394-B OF THE GENERAL BUSINESS LAW. A BREACH OF THIS PROVISION SHALL SUBJECT THE SELLER TO PAY DAMAGES UP TO TWICE THE AMOUNT OF THE ACTUAL DAMAGES PLUS REASONABLE ATTORNEYS FEES." The provisions of this paragraph shall be specifically set forth in every contract for services; or in the event that such provisions are omitted therefrom, they shall be deemed a part of such contract by operation of law and shall be enforceable as though fully set forth therein.
(b)All moneys paid pursuant to such contract shall be refunded within thirty business days of receipt of such notice of cancellation. If the buyer has executed any credit or loan agreement to pay for all or part of the service, any such negotiable instrument executed by the buyer shall also be returned within thirty days. Any buyer who cancels such contract within three days of execution shall be entitled to a full refund. After the three day time frame, a seller may assess a reasonable and fair service fee. In addition, the prorated cost of any instruction provided may be deducted out of the refund amount.
(c)If a buyer fails to attend instructional facilities for a period of five consecutive appointment days on which classes for the provision of services which are the subject of the contract were prearranged with the buyer, the contract shall be deemed to be canceled, unless the buyer otherwise provides written consent to maintain the contract. All monies shall be refunded pursuant to paragraph (b) of this subdivision, however, the instructional facility may withhold monies to cover the prorated cost of the prearranged instructional services in which the buyer failed to attend.
6.Nothing herein shall be construed to apply to contracts for instruction at schools operating pursuant to the provisions of the education law.
7.This section shall apply to all contracts to be executed or renewed after May first, nineteen hundred sixty-four.
8.Any contract for services which is inconsistent with the applicable provisions of this section and any waiver by the buyer of the provisions of this section shall be void and unenforceable as contrary to public policy.
9.Nothing in this section shall be construed so as to nullify or impair any right or rights which a buyer may have against a seller at common law, by statute, or otherwise.
10.In addition to the remedies hereinbefore provided, the attorney general may bring an action on behalf of the people of the state to restrain further violations of this section, to enforce the provisions of this section and for such other relief as may be appropriate.
11.No provision of this section shall be deemed to restrict the authority of any county, city, town or village to enact and enforce additional laws, ordinances or codes, or portions thereof, provided the provisions thereof are not inconsistent with the provisions of this section.
Section 394-B — Limitations on certain contracts for instruction or use of physical or social training facilities,
https://www.nysenate.gov/legislation/laws/GBS/394-B (updated Sep. 22, 2014; accessed Nov. 25, 2023).