California Civil Code

§ 1801.6

CIV § 1801.6Div. 3 · Title 2 · Part 4 · Ch. 1 · Art. 1

Statute text

(a)The Legislature finds that the decisional law of this state regarding the characterization of credit transactions as either loans or credit sales has been made unclear by the holding in King v. Central Bank, 18 Cal. 3d 840. It is the purpose of subdivision (b) to clarify such law by establishing standards for determining whether a transaction is subject to the Unruh Act. However, subdivision (b) is not intended to abrogate the judicial principle that the substance of a transaction rather than its form is determinative of its characterization as a loan or credit sale as exemplified by such decisions as Verbeck v. Clymer, 202 Cal. 557, Milana v. Credit Discount Co., 27 Cal. 2d 335, and Boerner v. Colwell Co., 21 Cal. 3d 37. Subdivision (b) also is not intended to abrogate the decision in Morgan v. Reasor Corp., 69 Cal. 2d 881, to the extent such decision has not been modified by Chapter 554 of the Statutes of 1969 or other legislative amendments to the Unruh Act.

(b)The provisions of this chapter shall not apply to any transaction in the form of a loan made by a supervised financial organization to a buyer of goods or services where all or a portion of the loan proceeds are used to purchase such goods or services, whether or not the seller of such goods or services arranges the loan or participates in the preparation of the loan documents, unless the supervised financial organization and the seller:

(1)Are related by common ownership and control and the relationship was a material factor in the loan transaction; or

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Legislative history

Amended by Stats. 1980, Ch. 438, Sec. 1.