New York § 899-DDD - 899-DDDContract requirements; right of rescission

§ 899-DDD. 899-DDDContract requirements; right of rescission

* § 899-ddd. Contract requirements; right of rescission. 1. All consumer litigation funding contracts shall meet the following requirements: (a) a contract shall be written in a clear and coherent manner using words with common, everyday meanings to enable the average consumer who makes a reasonable effort under ordinary circumstances to read and understand the terms of the contract without having to obtain the assistance of a professional; (b) the contract shall be completely filled in when presented to the consumer for signature; (c) the contract shall contain, in twelve point bold type font, a right of rescission, allowing the consumer to cancel the contract without penalty or further obligation if, within ten business days after the funding date, the consumer returns to the consumer litigation funding company the full amount of the disbursed funds; (d) the contract shall contain the initials of the consumer on each page; (e) a statement that there are no fees or charges to be paid by the consumer other than what is disclosed on the disclosure form; (f) in the event the consumer seeks more than one litigation funding contract from the same company, a disclosure providing the cumulative amount due from the consumer for all transactions, including charges under all contracts, if repayment is made any time after the contracts are executed; (g) a statement of the maximum amount the consumer may be obligated to pay under the contract other than in a case of material breach, fraud or misrepresentation by or on behalf of the consumer; and (h) clear and conspicuous detail of how charges, including any applicable fees, are incurred or accrued. 2. The contract shall contain a written acknowledgement by the attorney retained by the consumer in the legal claim that attests to the following: (a) the attorney has reviewed the mandatory disclosures in section eight hundred ninety-nine-ggg of this article with the consumer; (b) the attorney is being paid on a contingency basis pursuant to a written fee agreement; (c) all proceeds of the legal claim will be disbursed via either the trust account of the attorney or a settlement fund established to receive the proceeds of the legal claim on behalf of the consumer; (d) the attorney is obligated to disburse funds from the legal claim and take any other steps to ensure that the terms of the litigation funding contract are fulfilled; (e) the attorney has not received a referral fee or other consideration from the consumer litigation funding company in connection with the consumer litigation funding, nor will the attorney receive such fee or other consideration in the future; and (f) the attorney in the legal claim has provided no tax, public or private benefit planning, or financial advice regarding this transaction. 3. In the event that the acknowledgement required pursuant to paragraph (c) of subdivision two of this section is not completed by the attorney or firm retained by the consumer in the legal claim, the contract shall be null and void. The contract shall remain valid and enforceable in the event the consumer terminates the initial attorney and/or retains a new attorney with respect to the legal claim. 4. Notwithstanding paragraph b of subdivision three of section 5-501 of the general obligations law, no prepayment penalties or fees shall be charged or collected on consumer litigation funding. A prepayment penalty on consumer litigation funding shall be unenforceable. * NB Effective and Repealed June 17, 2026