Contracts: consumer goods and services: dispute resolution provisions.

Senator Umberg advances a measure that adds a new Civil Code provision to constrain how dispute-resolution clauses appear in consumer use agreements, placing the core change in a limitation that dispute-resolution terms may address only matters arising from the use, payment, or provision of the contracted good, service, money, or credit.

The proposal defines key terms by drawing on existing California definitions: “consumer” aligns with the Business and Professions Code, “consumer use agreement” means a contract through which a consumer uses or enjoys a good, service, money, or credit, and “person” incorporates the BPC definition. It then sets forth that dispute-resolution terms within a consumer use agreement are limited to issues connected to use, payment, or provision of the contracted good or service. A waiver of these protections is declared void and unenforceable, and the provisions are to be liberally construed to protect consumers. The duties imposed are described as cumulative with other laws and do not excuse or narrow the rights or remedies available under existing law.

The measure interacts with existing California protections noted in the legislative digest, which already prohibit waivers of certain consumer rights and limit a consumer’s ability to file complaints with licensing boards. The new provision adds a targeted constraint specific to how dispute-resolution mechanisms may be drafted in consumer use agreements, without specifying a separate enforcement mechanism or funding in the text. It covers agreements that fit the defined “consumer use agreement” category and relies on general contract-law and consumer-protection mechanisms for enforcement, since no dedicated enforcement framework is outlined.

Practically, the proposal signals that businesses drafting consumer use agreements must ensure dispute-resolution terms address only issues tied to use, payment, or provision, and must avoid waivers that run afoul of the new protections. For consumers, the change clarifies the permissible scope of dispute-resolution clauses and reinforces the invalidity of waivers attempting to circumvent these limits. Ambiguities may arise over whether particular clauses—such as forum selection, class-action waivers, or remedies not plainly linked to use/pay/provision—fit within the restricted scope, potentially prompting judicial interpretation or regulatory guidance. The broader policy context situates the measure within a framework of contractual protections for consumers while preserving compatibility with other existing consumer-rights provisions.