Can a Delaware consumer contract get the buyer to waive statutory protections, or include the usual creditor boilerplate?
No, for a retail installment sale of goods or services: any waiver by the buyer of the Retail Installment Sales chapter is contrary to public policy and unenforceable and void, and a list of specific clauses may not appear in the contract at all: a waiver of claims or defences against the seller (or, except as § 4312 allows, against an assignee), an arbitrary acceleration clause, authority to enter the buyer's premises unlawfully or breach the peace on repossession, a waiver of the buyer's right of action for illegal collection or repossession conduct, a power of attorney appointing the seller as the buyer's agent for repossession, and any release of the seller from legal remedies the buyer would have. A prohibited provision is void, but the rest of the contract survives.
The trap
Delaware kills the clause rather than the deal: § 4314 makes the offending provision void 'but shall not otherwise affect the validity of the contract', so a seller cannot use its own unlawful boilerplate to unwind a bargain that has turned bad. The bite is in § 4311's list, which reaches terms a drafter would not think of as waivers at all: a waiver-of-defences clause against an ASSIGNEE, and a discretionary acceleration clause exercisable 'arbitrarily and without reasonable cause' even with no default. Note the scope, which is narrower than the chapter's name suggests: MOTOR VEHICLES ARE NOT 'goods' here. Section 4301(3) defines goods as tangible chattels bought primarily for personal, family or household purposes but expressly 'does not include any motor vehicle', so the commonest retail instalment contract of all gets none of this chapter when what is sold is the vehicle; a financed repair can still be a covered sale of 'services' under § 4301(12), and § 4302(c) also takes a sale for a cash sale price of $75 or less, where the seller retains no title, lien or security interest, out of the whole chapter. Read its second sentence separately: 'This section shall not apply to sales made pursuant to the provisions of §§ 4334-4343 of this title'. §§ 4334-4343 is the retail installment ACCOUNT subchapter, which § 4301(8) and (11) extend to credit-card accounts, and what it removes is § 4302 itself, so the anti-waiver rule does not reach a revolving or card account. This is the retail installment chapter, not a general consumer statute; Delaware's Consumer Fraud Act (6 Del. C. ch. 25, subch. II) contains no comparable anti-waiver section that this research found.
7 authorities
- statute6 Del. C. § 4302enactment date not established
The words that state the rule
(a) Any waiver of the buyer of this chapter shall be deemed contrary to public policy and shall be unenforceable and void.
- statute6 Del. C. § 4311enactment date not established
The words that state the rule
No contract or obligation shall contain any provision by which: (1) The buyer agrees not to assert against a seller a claim or defense arising out of the sale or agrees not to assert against an assignee such a claim or defense other than as provided in § 4312 of this title; (2) In the absence of the buyer’s default in the performance of any obligations, the holder may, arbitrarily and without reasonable cause, accelerate the maturity of any part or all of the amount owing thereunder; (3) The seller or holder of the contract or other person acting as agent is given authority to enter upon the buyer’s premises unlawfully or to commit any breach of the peace in the repossession of goods; (4) The buyer waives any right of action against the seller or holder of the contract or other person acting as agent, for any illegal act committed in the collection of payments under the contract or in the repossession of goods; (5) The buyer executes a power of attorney appointing the seller or holder of the contract, or other person acting as agent, as the buyer’s agent in the repossession of goods; (6) The buyer relieves the seller from liability for any legal remedies which the buyer may have against the seller under the contract or any separate instrument executed in connection therewith.
- statute6 Del. C. § 4314enactment date not established
The words that state the rule
Any provision in a contract which is prohibited by this chapter shall be void but shall not otherwise affect the validity of the contract.
- statute6 Del. C. § 4312enactment date not established
The words that state the rule
No right of action or defense arising out of a retail installment sale which the buyer has against the seller, and which would be cut off by assignment, shall be cut off by assignment of the contract to any third party whether or not the third party acquires the contract in good faith and for value unless the assignee given notice of the assignment to the buyer as provided in this section and within 15 days of the mailing of such notice receives no written notice of the facts giving rise to the claim or defense of the buyer, or unless the assignee acquires the contract or evidence of indebtedness relying in good faith upon a certificate of completion or certificate of satisfaction signed by the buyer. A notice of assignment shall be in writing addressed to the buyer at the address shown on the contract and shall identify the contract and state that the buyer must, within 15 days of the date of mailing of such notice, notify the assignee in writing of any facts giving rise to a claim or defense which the buyer may have. The notice of assignment shall state the name of the seller and buyer, a description of the goods and services, the time balance and the number and amounts of the installments. If a certificate of completion or satisfaction is relied upon, the following notation must appear at the top thereof in at least 10 point bold type: “Notice to Buyer — Do Not Sign this certificate until all services have been satisfactorily performed and materials supplied or goods received and found satisfactory.
- statute6 Del. C. § 4301enactment date not established
The words that state the rule
§ 4301. Definitions. Unless the context or subject matter otherwise requires, the definitions given in this section govern the construction of this chapter. (1) “Cash sale price” means the cash sale price stated in a retail installment contract for which the seller would sell or furnish to the buyer and the buyer would buy or obtain from the seller the goods or services which are the subject matter of a retail installment contract if the sale were a sale for cash instead of a retail installment sale. The cash sale price may include any taxes and cash sale prices for accessories and services, if any, included in a retail installment sale. (2) “Financing agency” means a person engaged in this State in whole or in part in the business of purchasing retail installment contracts, or installment accounts from 1 or more retail sellers. The term includes, but is not limited, to a bank, trust company, private banker, or investment company, if so engaged. (3) “Goods” mean tangible chattels bought for use primarily for personal, family or household purposes, as distinguished from commercial or agricultural purposes, including certificates or coupons exchangeable for such goods, and including goods which, at the time of the sale or subsequently are to be affixed to real property as to become a part of such real property whether or not severable therefrom, but does not include any motor vehicle which for the purposes of this chapter shall mean any device propelled or drawn by any power other than muscular power, in, upon, or by which any person or property is, or may be transported or drawn upon a highway.
- statute6 Del. C. § 4302enactment date not established
The words that state the rule
(c) Except as provided in § 4315 of this title, this chapter shall not apply to any retail installment sale which is made for a cash sale price of $75 or less, where no title, lien or other security interest is retained or taken by the seller. This section shall not apply to sales made pursuant to the provisions of §§ 4334-4343 of this title.
- statute6 Del. C. § 4301enactment date not established
The words that state the rule
(12) “Services” mean work, labor and services, for other than a commercial or business use, including services furnished in connection with the improvement of real property but does not include the services for which the tariffs, rates, charges, costs or expenses, including in each instance the time sale price, is required by law to be filed with the approval by the federal government or any official department, division, commission or agency of the United States.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.