Existing law generally regulates the formation and enforcement of contracts, and also regulates consumer refunds under specified circumstances.
Assembly Bill 1900 (AB 1900) adds to that body of law by enacting Civil Code section 1748.50. section 1748.50 states, in whole, that “any provision in a contract or agreement that prohibits a consumer from publishing or making statements about the business as a condition of receiving a partial or complete refund or other consideration or thing of value is contrary to public policy and shall be void and unenforceable.”
While AB 1900 explicitly applies to “business,” it is important to note that the law does not provide a definition as to what types of entities or activities qualify as a “business,” creating ambiguity as to whether this new law applies to private schools. Nor does the law define or explain what is involved in “making a statement about the business.” Given this ambiguity and uncertainty, private schools should exercise caution and consult with counsel when evaluating whether to provide tuition refunds involving an agreement that limits a parent or guardian’s ability to make statements about the school.
(AB 1900 adds Chapter 1.5 (commencing with section 1748.50) to Title 1.3.5 of Part 4 of Division 3 of the Civil Code.)