Chapter 16a. – CONSUMER CREDIT CODE Article 1. – …

1 1 Chapter 16a. CONSUMER CREDIT code Article 1. general provisions AND DEFINITIONS Part 1 SHORT TITLE, CONSTRUCTION, general provisions 16a-1-101. (UCCC) Short title. 16a-1-101 through 16a-9-102 shall be known and may be cited as the uniform CONSUMER CREDIT code . History: L. 1973, ch. 85, 1; Jan. 1, 1974. Attorney general s Opinions: Finance charges; additional charges not included therein. 81-209. Disclosure; discounts for cash purchases. 86-115. CONSUMER CREDIT insurance; property and liability insurance. 87-3. KANSAS COMMENT, 2010 The Kansas uniform CONSUMER CREDIT code ( 16a-1-101 et seq.) is referred to in these comments as the U3C. The Kansas uniform commercial code ( 84-1-101 et seq.) is referred to as the UCC. The Kansas CONSUMER protection act ( 50-623 et seq.) is referred to as the KCPA. The federal truth in lending act (15 1601 et seq.) is the TILA.

2 "Regulation Z," when used in these comments, refers to the Federal Reserve Board's truth in lending regulations, 12 Part 226. The scope and application of the U3C are determined by 16a-1-201 and by the various definitions in 16a-1-301. These comments take into account all amendments through the 2009 Session Laws of Kansas. They should be read with caution, however, as future amendments are inevitable. Additional guidance on the U3C may be found in Administrative Regulations, 75-6-1 et seq., and Administrative Interpretations, No. 1001 et seq. which can be found online at The U3C is administered by the Office of State Bank Commissioner deputy commissioner of the division of CONSUMER and mortgage lending. Recent Kansas legislative bills and supplemental notes can be accessed at Some states' versions of the uniform act have been held not to be an unconstitutional burden on interstate commerce nor violative of the due process rights of the creditor.

3 See Quik Payday, Inc. v. Stork, 509 974 (D. Kan. 2007), aff'd 549 1302 (10th Cir. 2008), cert. denied 129 2062; and Aldens, Inc. v. Miller, 466 379 ( Iowa 1979), aff'd 610 538, cert. denied 446 919; Aldens, Inc. v. Ryan, 571 1159 (10th Cir. 1978), cert. denied 99 180. 16a-1-102. (UCCC) Purposes; rules of construction. (1) 16a-1-101 through 16a-9-102, and amendments thereto, shall be liberally construed and applied to promote its underlying purposes and policies. (2) The underlying purposes and policies of this act are: (a) To simplify, clarify and modernize the law governing retail installment sales, CONSUMER CREDIT and CONSUMER loans; (b) to provide rate ceilings to assure an adequate supply of CREDIT to consumers; 2 (c) to further CONSUMER understanding of the terms of CREDIT transactions and to foster competition among suppliers of CONSUMER CREDIT so that consumers may obtain CREDIT at reasonable cost; (d) to protect CONSUMER buyers, lessees, and borrowers against unfair practices by some suppliers of CONSUMER CREDIT , having due regard for the interests of legitimate and scrupulous creditors; (e) to permit and encourage the development of fair and economically sound CONSUMER CREDIT practices.

4 And (f) to make uniform the law, including administrative rules and regulations, among the various jurisdictions. (3) A reference to a requirement imposed by 16a-1-101 through 16a-9-102, and amendments thereto, includes reference to a related rule and regulation of the administrator adopted pursuant to this act. History: L. 1973, ch. 85, 2; L. 1981, ch. 93, 2; L. 1988, ch. 85, 1; July 1. Attorney general s Opinions: Interest and charges; usury. 79-252. Limitations on CONSUMER s liability; balloon payments; denial of right to refinance. 82-143. CONSUMER loans; finance charge; exemption of adjustable rate loans from maximum finance charge limits. 82-227. Property insurance; damage to property unrelated to CREDIT transaction. 86-42. Attorney fees; national direct student loans. 86-113. Disclosure; discounts for cash purchases.

5 86-115. Authority of legislature to transfer money from special revenue funds into state general fund. 2002-45. KANSAS COMMENT, 2000 One of the primary purposes of the U3C is to provide a unified, functional framework for the entire subject of CONSUMER CREDIT . To this end, the U3C places all aspects of CONSUMER CREDIT under a single statutory umbrella. It replaces widely scattered pieces of legislation which were enacted by different Kansas legislatures, at different times, for different reasons: the 1955 CONSUMER loan act, those portions of the 1958 sales finance act dealing with motor vehicles and those dealing with non-motor vehicles, the 1969 truth in lending act, part of the 1929 CREDIT union law, various installment loan provisions , and part of the 1968 buyer protection act. In addition, the U3C alters several provisions in the UCC for transactions involving consumers.

6 For a more detailed listing of statutes affected by the enactment of the U3C in Kansas, see the Kansas comment to 16a-9-101. 16a-1-103. (UCCC) Supplementary general principles of law applicable. Unless displaced by the particular provisions of 16a-1-101 through 16a-9-102, the uniform commercial code and the principles of law and equity, including the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause supplement its provisions . History: L. 1973, ch. 85, 3; Jan. 1, 1974. KANSAS COMMENT, 2010 Many transactions are subject both to the U3C and to other bodies of law, particularly the UCC. In the event of conflict, the U3C controls. See 84-9-201. In other cases, the U3C is supplemented by the UCC and other principles.

7 For example, a CONSUMER CREDIT contract would be subject in appropriate cases to the UCC's general duty of good faith in the performance or enforcement of a contract or duty within the UCC. See 84-1-302(b). In general , such principles have not been repeated in the U3C. In addition, many CONSUMER CREDIT agreements will also be subject to the KCPA, and that act should be consulted in appropriate cases. Finally, CONSUMER remedies under the UCC, the KCPA, and other laws generally supplement those that are available under the U3C. See the Kansas comment to 16a-6-115. 3 16a-1-104. (UCCC) Construction against implicit repeal. 16a-1-101 through 16a-9-102 being a general act intended as a unified coverage of its subject matter, no part of it shall be deemed to be impliedly repealed by subsequent legislation if such construction can reasonably be avoided. History: L. 1973, ch. 85, 4; Jan.

8 1, 1974. 16a-1-105. (UCCC) Severability. If any provision of this act or the application thereof to any person or circumstances is held invalid, the invalidity does not affect other provisions or applications of this act which can be given effect without the invalid provision or application, and to this end the provisions of this act are severable. History: L. 1973, ch. 85, 5; Jan. 1, 1974. 16a-1-107. (UCCC) Waiver; agreement to forego rights; settlement of claims. (1) Except as otherwise provided in 16a-1-101 through 16a-9-102, a CONSUMER may not waive or agree to forego rights or benefits under such sections of this act. (2) A claim by a CONSUMER against a creditor for an excess charge, other violation of 16a-1-101 through 16a-9-102, or civil penalty, or a claim against a CONSUMER for default or breach of a duty imposed by such sections of this act, if disputed in good faith, may be settled by agreement.

9 (3) A claim, whether or not disputed, against a CONSUMER may be settled for less value than the amount claimed. (4) A settlement in which the CONSUMER waives or agrees to forego rights or benefits under 16a-1-101 through 16a-9-102 is invalid if the court as a matter of law finds the settlement to have been unconscionable at the time it was made. The competence of the CONSUMER , any deception or coercion practiced upon him, the nature and extent of the legal advice received by him, and the value of the consideration are relevant to the issue of unconscionability. History: L. 1973, ch. 85, 6; Jan. 1, 1974. Attorney general s Opinions: Limitations on CONSUMER s liability; balloon payments; denial of right to refinance. 82-143. KANSAS COMMENT, 2010 Unlike the UCC, which broadly permits variation by agreement ( 84-1-302(a)), the U3C starts from the premise that a CONSUMER generally may not waive or agree to forego rights or benefits under the U3C.

10 This provision is typical of CONSUMER protection legislation; a similar section is contained in the KCPA. See 50-625; compare 84-9-602. In the absence of a provision of the U3C specifically authorizing a waiver, any waiver or agreement to forego must be part of a settlement, and settlements are subject to review as provided in this section. 16a-1-108. (UCCC) Effect of act on powers of organization. (1) 16a-1-101 through 16a-9-102, and amendments thereto, prescribes maximum charges for all creditors, except lessors and those excluded ( 16a-1- 202, and amendments thereto), extending CONSUMER CREDIT including CONSUMER CREDIT sales (subsection (14) of 16a-1-301, and amendments thereto) and CONSUMER loans (subsection (17) of 16a-1-301, and amendments thereto), and displaces existing limitations on the powers of those creditors based on maximum charges.