Can this contract waive the customer's Deceptive Trade Practices Act rights?
Only under narrow conditions, and the form is mandatory. Any waiver by a consumer of the subchapter is contrary to public policy and unenforceable and void, UNLESS all three of the following hold: the waiver is in writing and signed by the consumer; the consumer is not in a significantly disparate bargaining position; and the consumer is represented by legal counsel in seeking or acquiring the goods or services. The waiver must additionally be conspicuous and in bold-face type of at least 10 points, identified by the heading 'Waiver of Consumer Rights' or words of similar meaning, and in substantially the form set out in § 17.42(c)(3). A waiver is NOT effective if the consumer's legal counsel was directly or indirectly identified, suggested, or selected by a defendant or a defendant's agent. The waiver may be modified to waive only specified rights under the subchapter, and the fact that a consumer signed one is not a defense to an action brought by the attorney general under § 17.47.
The trap
These are formal requirements, not factors to be balanced, and they defeat two common commercial habits at once. A waiver that reads impeccably but is set in nine-point type does not meet § 17.42(c)(1). And the counsel-selection rule in subsection (b) kills the familiar practice of the seller recommending or paying for the buyer's lawyer: indirect suggestion is enough to void it. Before any of this matters, check two thresholds: whether the counterparty is a 'consumer' at all, and whether § 17.49(f)-(g) exempts the deal outright, a written contract over $100,000 where the consumer had independent counsel and the deal does not involve the consumer's residence, or any transaction over $500,000 other than one involving the consumer's residence. On a deal above those lines there is nothing to waive, because the subchapter does not apply. § 17.45(4) excludes from the term a business consumer with assets of $25 million or more, or one owned or controlled by a corporation or entity with assets of $25 million or more, and a 'business consumer' under § 17.45(10) is an individual, partnership or corporation seeking or acquiring goods or services for commercial or business use. Against a counterparty over that threshold there is nothing for § 17.42 to void, and a waiver clause is belt-and-braces rather than a requirement. Against one under it, the form is mandatory and the three conditions in (a) are cumulative.
4 authorities
- statuteTex. Bus. & Com. Code § 17.42enacted 1995-09-01
The words that state the rule
(a) Any waiver by a consumer of the provisions of this subchapter is contrary to public policy and is unenforceable and void; provided, however, that a waiver is valid and enforceable if: (1) the waiver is in writing and is signed by the consumer; (2) the consumer is not in a significantly disparate bargaining position; and (3) the consumer is represented by legal counsel in seeking or acquiring the goods or services. (b) A waiver under Subsection (a) is not effective if the consumer's legal counsel was directly or indirectly identified, suggested, or selected by a defendant or an agent of the defendant. (c) A waiver under this section must be: (1) conspicuous and in bold-face type of at least 10 points in size; (2) identified by the heading "Waiver of Consumer Rights," or words of similar meaning; and (3) in substantially the following form: "I waive my rights under the Deceptive Trade Practices-Consumer Protection Act, Section 17.41 et seq., Business & Commerce Code, a law that gives consumers special rights and protections. After consultation with an attorney of my own selection, I voluntarily consent to this waiver." (d) The waiver required by Subsection (c) may be modified to waive only specified rights under this subchapter. (e) The fact that a consumer has signed a waiver under this section is not a defense to an action brought by the attorney general under Section 17.47 .
- statuteTex. Bus. & Com. Code § 17.45enactment date not established
The words that state the rule
(4) "Consumer" means an individual, partnership, corporation, this state, or a subdivision or agency of this state who seeks or acquires by purchase or lease, any goods or services, except that the term does not include a business consumer that has assets of $25 million or more, or that is owned or controlled by a corporation or entity with assets of $25 million or more.
- statuteTex. Bus. & Com. Code § 17.45enactment date not established
The words that state the rule
(10) "Business consumer" means an individual, partnership, or corporation who seeks or acquires by purchase or lease, any goods or services for commercial or business use. The term does not include this state or a subdivision or agency of this state.
- statuteTex. Bus. & Com. Code § 17.49enacted 2011-05-28
The words that state the rule
(f) Nothing in the subchapter shall apply to a claim arising out of a written contract if: (1) the contract relates to a transaction, a project, or a set of transactions related to the same project involving total consideration by the consumer of more than $100,000; (2) in negotiating the contract the consumer is represented by legal counsel who is not directly or indirectly identified, suggested, or selected by the defendant or an agent of the defendant; and (3) the contract does not involve the consumer's residence. (g) Nothing in this subchapter shall apply to a cause of action arising from a transaction, a project, or a set of transactions relating to the same project, involving total consideration by the consumer of more than $500,000, other than a cause of action involving a consumer's residence.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.