Repair Contracts Not One-Way Street

One of the new laws that went into effect at the beginning of this year gives consumers the right to escape from their automobile-service contracts.

Everyone who's ever bought a car knows what an automobile service contract is. It's the second item on the salesman's list; after he's sold the car, then he sells the service contract.

It is essentially an agreement to keep your car in tip-top shape without further expense to you. You pay a set fee, and the company agrees to make certain kinds of repairs for a specified period of time. It is in addition to the normal manufacturer's warranties.

May Be Good or Bad

Whether such service contracts are a good or bad idea depends on the circumstances.

Obviously, if you never need any of the specified repairs, your payment for the contract was for naught (except a little peace of mind), but if you need a major brake overhaul that costs much more than the price of the contract, you're a genius for buying the service contract.

In any event, this new state law requires full disclosure so that the consumer knows what he is buying. The law went into effect Jan. 1 and only applies to service contracts purchased from that date on.

The dealer must make the actual contract available for you to read before you sign. He can give you a brochure that describes the contract at first, but, within 60 days after purchase, the dealer has to give you your own copy of the contract itself.

Existing law already required that the contract disclose in "simple and readily understood language" the terms, conditions and exclusions of the contract.

When you get your copy of the contract, read it. Find out what is included and what is excluded to see if you are getting your money's worth. Are there any deductibles? Any exclusions that you don't understand? Are you limited to dealer repair shops? Will you be reimbursed if your car breaks down on a deserted highway near Bakersfield and you have it repaired by a local repair shop?

If you don't like what you read, the new law gives you the right to cancel the contract and get a full refund. To get your full refund, you must have not made any repair claims and must send a written cancellation notice to the person specified in the contract.

But there is a time limit for this full refund. If it's a new car, you have 60 days from receipt of your copy of the contract to cancel; if it's a used car without manufacturer warranties, you have only 30 days.

You can still get a partial refund if you have had the car repaired under the contract in the first 30 or 60 days. The amount of the refund will be prorated, based either on time elapsed or mileage driven, at the option of the seller.

Can Be Canceled

You can even cancel the contract by the same type of written notice after the 30- or 60-day periods expire and receive a partial refund based on the same pro rata formula. However, you can also be charged a $25 cancellation fee.

In mid-February, the Tel Law service in Riverside will have a taped description of this new law. Call (714) 824-2300, and ask to listen to tape No. 251. There is no charge for the service, but you will be charged by the phone company if it is a toll call.

Legal Brief

In the past, there has been mention of free pamphlets distributed by the State Bar Assn. These brochures answer questions about such legal topics as divorce, child custody, contracts, estate planning, small claims court and landlord-tenant problems. These very same pamphlets are also available from a local source, the Los Angeles County Bar Assn.

The local bar distributes the pamphlets, which are prepared by the state bar. Neither of the associations charges for the pamphlets. You can drop by the L.A. County Bar's Lawyer Referral and Information Service (LRIS) office in person to pick up any of the brochures. The address is 617 S. Olive St. in Downtown Los Angeles.

If you want one of the brochures mailed to you from the L.A. County Bar, send a business-size, self-addressed stamped envelope to LRIS, P.O. Box 55020, Los Angeles, Calif. 90055.

You may also order the brochures directly from State Bar Pamphlets, 555 Franklin St., San Francisco, Calif. 94102.

Attorney Jeffrey S. Klein, The Times' senior staff counsel, cannot answer mail personally but will respond in this column to questions of general interest about the law. Do not telephone. Write to Jeffrey S. Klein, Legal View, The Times, Times Mirror Square, Los Angeles 90053.

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