Can Alaska's Unfair Trade Practices Act reach a term in our contract, not just marketing or sales claims?
Yes, and a clause purporting to waive the Act is void, so the contract cannot be used to contract out of it either. AS 45.50.471(a) declares "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of trade or commerce" unlawful, and the enumerated list in (b) reaches contract language directly: it is an unfair or deceptive act or practice to engage in "representing that an agreement confers or involves rights, remedies, or obligations that it does not confer or involve, or that are prohibited by law" (AS 45.50.471(b)(14)). AS 45.50.542 removes the obvious drafting answer: "[a] waiver by a consumer of the provisions of AS 45.50.471 — 45.50.561 is contrary to public policy and is unenforceable and void." Enforcing a contract can itself be the violation. In Kenai Chrysler Center, Inc. v. Denison the Court accepted that the Act "require[s] proof of something more than the mere assertion of a good faith but mistaken belief that a contract was valid" but held that "courts have broadly interpreted similar provisions to prohibit merchants from going beyond mere assertion of mistaken beliefs by engaging in conduct that is deceptive, unethical, or unfair," and sustained a verdict on findings that the seller's "attempts to enforce the sales contract blatantly disregarded the Denisons' rights and amounted to unethical conduct." What follows a violation is set by statute: a person who suffers an ascertainable loss "may bring a civil action to recover for each unlawful act or practice three times the actual damages or $500, whichever is greater" (AS 45.50.531(a)).
The trap
The list in (b) is not exhaustive of what the Act reaches: subsection (c) states the listed acts "are in addition to and do not limit the types of unlawful acts and practices actionable at common law or under other state statutes". A contract term could be attacked as an unfair or deceptive practice on a theory that never appears in the (b) list at all. The real limit is subject matter, not who the parties are. Western Star Trucks, Inc. v. Big Iron Equipment Service, Inc. settles both halves of that in one sentence: "While First National Bank and Aloha Lumber clearly hold that the act does not apply to transactions involving real estate, we do not think that these cases should be interpreted to bar the application of the act to transactions between businesses involving services or commercial or consumer personal property." So a business counterparty can sue over a (b)(14) misrepresentation about an agreement, and a real-estate transaction is outside the Act however deceptive the clause. Two cautions remain. The waiver bar in AS 45.50.542 is written as a waiver "by a consumer," so it does not on its face answer whether a business counterparty may waive, and no decision read for this rule decides that. And the statute has been amended since the decisions that apply it: an opinion from 2007 sets out subsection (b)'s lead-in in a form that said expressly that the listed acts were not the only ones, where the text in force now says only that the two terms "include the following acts". The non-exhaustiveness point therefore rests on the word "include" and on subsection (c), not on an express phrase in the list's opening.
10 authorities
- statuteAS 45.50.471enactment date not established
The words that state the rule
Unfair methods of competition and unfair or deceptive acts or practices in the conduct of trade or commerce are declared to be unlawful.
- statuteAS 45.50.471enactment date not established
The words that state the rule
The terms “unfair methods of competition” and “unfair or deceptive acts or practices” include the following acts:
- statuteAS 45.50.471enactment date not established
The words that state the rule
representing that an agreement confers or involves rights, remedies, or obligations that it does not confer or involve, or that are prohibited by law
- statuteAS 45.50.471enactment date not established
The words that state the rule
The unlawful acts and practices listed in (b) of this section are in addition to and do not limit the types of unlawful acts and practices actionable at common law or under other state statutes.
- statuteAS 45.50.542enactment date not established
The words that state the rule
A waiver by a consumer of the provisions of AS 45.50.471 — 45.50.561 is contrary to public policy and is unenforceable and void.
- statuteAS 45.50.531enactment date not established
The words that state the rule
A person who suffers an ascertainable loss of money or property as a result of another person's act or practice declared unlawful by AS 45.50.471 may bring a civil action to recover for each unlawful act or practice three times the actual damages or $500, whichever is greater. The court may provide other relief it considers necessary and proper. Nothing in this subsection prevents a person who brings an action under this subsection from pursuing other remedies available under other law, including common law.
The words that state the rule
Kenai Chrysler correctly asserts that these provisions require proof of something more than the mere assertion of a good faith but mistaken belief that a contract was valid. [43] Yet courts have broadly interpreted similar provisions to prohibit merchants from going beyond mere assertion of mistaken beliefs by engaging in conduct that is deceptive, unethical, or unfair.
The words that state the rule
In our view, a jury considering the totality of these circumstances in the light most favorable to the Denisons could reasonably have found that Kenai Chrysler's attempts to enforce the sales contract blatantly disregarded the Denisons' rights and amounted to unethical conduct. [49] We thus conclude that the evidence as a whole was sufficient to support the Denisons' claims under the UTPA.
- case101 P.3d 1047Western Star Trucks, Inc. v. Big Iron Equipment Service, Inc.Alaskadecided 2004read it at the source ↗
The words that state the rule
While First National Bank and Aloha Lumber clearly hold that the act does not apply to transactions involving real estate, we do not think that these cases should be interpreted to bar the application of the act to transactions between businesses involving services or commercial or consumer personal property.
- case101 P.3d 1047Western Star Trucks, Inc. v. Big Iron Equipment Service, Inc.Alaskadecided 2004read it at the source ↗
The words that state the rule
We thus conclude that no sufficient reason exists for departing from the literal language of the act in connection with commercial transactions not involving real estate. Consequently, we affirm the judgment of the superior court.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.